Don’t Miss the Filing Deadline for Reporting foreign Gifts

May 13, 2010

If you are a U.S. taxpayer, or the executor of an estate of a U.S. decedent, and have a foreign trust or a large gift or bequest from a foreign person, you need to file a Form 3520. This pertains to gifts of more than $100,000 from a nonresident alien individual or a foreign estate (including persons related to the nonresident alien individual or foreign estate that you treated as gifts or bequests) or more than $14,139 from foreign corporations or foreign partnerships (including foreign persons related to such foreign corporations or foreign partnerships) that you treated as a gift.

The filing date is the same as the due date for income tax returns. For those who file on extension, the due dates are September 15, 2010 for trusts and October 15, 2010 for individuals.

The penalties for not filing are substantial. The penalty is generally 35% of the gross value of the any property transferred to a foreign trust, 35% of gross value of the distribution received from receipt of the distribution, or 5% of the amount of the gift for each month for which the failure to report continues (not to exceed 25% of the value).

For more information, please contact your Perelson Weiner partner.

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