IRS Form 3520 is generally filed to report transactions with foreign trusts. However, it is also required when a U.S. person receives aggregate gifts of $100,000 or more from nonresident individuals or foreign estates. Form 3520 is also required if the U.S. person receives a gift from a foreign corporation or foreign partnership. The reporting thresholds for gifts from foreign entities are significantly lower.

Gifts from foreign corporations are never recommended because there is a presumption that the payment is a dividend distribution that must be included in the U.S. person's gross income.

In this example, we look at a U.S. taxpayer who receives a gift of foreign currency from a foreign corporation owned by her aunt. The gift must be reported on Form 3520 and filed on or before the deadline of the taxpayer's Form 1040 individual income tax return.

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