Related Foreign Person Gifts to the U.S. & Form 3520

Related Foreign Person Gifts to the U.S. & Form 3520

Related Foreign Person Gifts to the U.S.

Related Foreign Person Gifts to US & Form 3520: Do I File?: When a U.S. person receives a gift from a foreign person, the IRS may require the gift to be reported to the Internal Revenue Service on Form 3520. In order to skirt the issue and circumvent reporting, foreign persons may try to split the gifts amongst related persons. Unfortunately, this does not reduce the total value of the gift subject to reporting on Form 3520. That is because a common misconception about IRS Form 3520 gifts is that the gift must be a single gift from a person that exceeds $100,000 — but that is inaccurate. The gift may be a single transaction or multiple transactions from the same person, in the same year. Moreover, the gifts may also come from “related persons.”

Calculating the $100,000+ Threshold 

As provided by the IRS:

“To calculate the threshold amount ($100,000), you must aggregate gifts from different foreign nonresident aliens and foreign estates if you know (or have reason to know) that those persons are related to each other (see Related Person, earlier) or one is acting as a nominee or intermediary for the other.

For example, if you receive a gift of $75,000 from nonresident alien individual A and a gift of $40,000 from nonresident alien individual B, and you know that A and B are related, you must answer “Yes” and complete columns (a) through (c) for each gift.

If you answered “Yes” to the question on line 54 and none of the gifts or bequests received exceeds $5,000, do not complete columns (a) through (c) of line 54. Instead, enter in column (b) of the first line, “No gifts or bequests exceed $5,000.”

International Tax Law Firm: Golding & Golding

Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure, including help clients with late reporting of Forms 3520 and 3520-A.

Contact our firm today for assistance with getting compliant.

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