Form 3520-A, page 4 says: Report each item on the proper form or schedule of your tax return. So, what are the proper places to report those numbers? The ones I care most about are the expenses (lines 9 to 14). 10a Foreign taxes => Form 1116
My assumption is on Schedule E, the same as for US trusts. From Schedule E instructions:
A U.S. person who transferred property to a foreign trust may have to report the income received by the trust as a result of the transferred property if, during 2022, the trust had a U.S. beneficiary. See section
679. An individual who received a distribution from, or who was the grantor of or transferor to, a foreign trust must also complete Part III of Schedule B (Form 1040) and may have to file Form 3520. In addition, the owner of a foreign trust must ensure that the trust files an annual information return on Form 3520-A.
It looks to me that Sch E, Part III applies to Form 1041 + K-1 A 3520-A does not have a 1041 nor a K-1. A 3520 also has neither.
The foreign trust itself should be reported on Schedule E, Part III. Generally there will be no dollar amounts reported here.To the extent that they are allowable, most of the expenses would flow to Schedule A. Some of them are suspended due to TCJA (though they may still be relevant for state tax returns). The treatment for each item is the same as it would be if the item were not sourced from the foreign trust.
Ira Smilovitz, EA Leonia, NJ
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.