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Completing Form 3520, Part IV for Large Foreign Gift or Bequest Reporting: Satisfying Filing Requirements

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Thursday, February 1, 2024

Recorded event now available

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This webinar will analyze the reporting requirements for large foreign gifts on Form 3520, Part IV. Our esteemed international tax panelist will discuss who is required to file, avoiding penalties for non and incomplete filings, and provide examples, including the completion of Part IV, U.S. Recipients of Gifts or Bequests Received During the Current Tax Year From Foreign Persons, of Form 3520.

Description

The IRS instructions for preparation of Form 3520, Part IV, opens with, "Note. If you fail to timely report foreign gifts that should be reported under section 6039F, the IRS may determine the income tax consequences of the receipt [emphasis added] of such gift and penalties may be imposed." Then, more congenially adds, "A gift to a U.S. person does not include any amount paid for qualified tuition or medical payments made on behalf of the U.S. person."

For a no-tax-due form, the penalties for non-filing are stiff. Not complying with Section 6039F reporting requirements can evoke penalties of five percent of the amount of the gift monthly up to a total of 25 percent. Determining what gifts are reportable, who is subject to gift reporting, and completing and submitting Form 3520 is not readily apparent. The filing threshold includes an aggregate reporting test requiring giftees to accumulate certain gifts received throughout the year. This threshold varies depending on whether the gift was received from a foreign individual or estate or a foreign corporation or partnership. Nonresident aliens and even minors can have a reporting obligation.

Recipients, international income tax practitioners, and trust and estate advisers all need to understand the reporting obligations for U.S. Recipients of Gifts or Bequests Received From Foreign Persons. Listen as our foreign international tax reporting expert explains the nuances of reporting gifts on Form 3520, Part IV.

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Outline

  1. Introduction and background
  2. Reporting requirements
    1. U.S. persons defined
    2. Reporting thresholds
    3. Aggregate reporting test
  3. Due dates and extensions
  4. Exceptions
  5. Flight of capital and capital control rules
  6. Completing the form
  7. Handling late and missed filings
  8. Additional reporting requirements
  9. Other considerations

Benefits

The panelist will cover these and other critical issues:

  • Properly completing and submitting Form 3520, Part IV for Large Foreign Gifts or Bequests
  • Handling missed and late filings of Form 3520
  • Understanding who must file, including often overlooked giftees who are subject to Section 6039F reporting requirements
  • Other probable U.S. and foreign filing obligations for large foreign gifts received
  • Applying the aggregate reporting test to foreign gifts received

Faculty

Santa, Mishkin
Mishkin Santa, JD, LLM, TEP
Principal, Director of International Tax
The Wolf Group

Mr. Santa focuses his practice on repatriation tax, as well as individual income tax compliance, estate, gift &...  |  Read More

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