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A statement that the trust will permit either the IRS or the U.S. beneficiary to inspect and copy the trust's permanent books of account, records, and such other documents that are necessary to establish the appropriate treatment of any distribution or deemed distribution for U.S. tax purposes.
This form is required by the Trustee of the foreign trust, to provide the IRS with information as to which US Beneficiary received a foreign trust distribution.
The Form 3520 requires the U.S. owner to provide the fair market value of the foreign trust the U.S. owner is treated as owning and to attach a separate statement (Foreign Grantor Trust Owner Statement) showing the amount of income attributable to him or her for U.S. federal income tax purposes.
The primary IRS reporting vehicle for a foreign grantor trust is a Form 3520-A.
US grantor (US citizen or resident): A foreign trust is also considered a grantor trust for US income tax purposes when a US grantor makes a gratuitous transfer to a foreign trust which has one or more US beneficiaries or potential US beneficiaries of any portion of the trust.