Under IRS Form 3520, there doesn't seem to be a clear explanation of what is a "foreign trust", in accordance with Section 679 of the Internal Revenue Code. For example, does a US citizen who contributes no money, but simply is named in a partnership, or a corporation, whose goal is to buy real estate outside the USA, and the US citizen is named as a "partner" or "shareholder", have to fill out IRS Form 3520? Assume the US citizen has no hand in creating the partnership or corporation other than to sign their name on some documents; further, that the US citizen is not either the main partner or the main shareholder. Further, assume the US person contributes either nothing, or contributes less than USD $10000 in the calendar year, and/or receives no tangible benefit either, since assume the value of the land at the present is nearly worthless, so whatever percentage the US citizen might have, it will be worth less than $10k or so at present. The instructions for Form 3520 are not entirely clear if the above hypotheticals (compound question) is a "reportable event". Under this hypothetical I want to avoid filling out Form 3520 as much as possible, until such time that the US citizen actually contributes or receives more than $10k in tangible value from the partnership or corporation (assuming such partnership or corporation is indeed a "foreign trust"). Of course the "safe answer" is to file anyway, but since this is a hypothetical I would like more speculative answers (such as even if a 'foreign trust' is really not applicable here at all, since no money from the US is being transfered into a 'trust' relationship, rather, this is more of a partnership/corporation set up now in anticipation of future gain) There is some suggestion in the instruction for Form 3520 that the "creation" of a foreign trust by a US citizen is a reportable event, but is being named in a partnership or corporation that is an unfunded 'shell' (or thinly funded) qualify as a "creation"? RL
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