Updated October 18, 2026. Quick answer: Part III of Form 3520 is for a U.S. person who received a distribution from a foreign trust during the year. It totals what you received, asks whether the trust gave you a beneficiary statement, and, if not, runs a default calculation that can produce an accumulation distribution and an interest charge. The resulting tax is carried to your income tax return.
What this part is for
The instructions open the part this way: “Complete Part III if you are a U.S. person who received a distribution from a foreign trust during the current tax year.” If an amount could be reported in two parts: “If you received an amount from a foreign trust that would require a report under both Parts III and IV (gifts or bequests) of Form 3520, report the amount only in Part III.” This page leaves out lines 25, 26 and 28, which this page does not walk through; read them on the form itself. The whole return is described in the Form 3520 guide, and a related page is Schedule B line 8 on foreign trust distributions.
The lines, one by one
| Line | What the form says |
|---|---|
| Note at top of Part III | “If you received an amount from a portion of a foreign trust of which you are treated as the owner, only complete lines 24 and 27.” |
| 24 | “Enter cash amounts or FMV of property received, directly or indirectly, during your current tax year, from the foreign trust”. Column captions: “Date of distribution”; “Description of property received”; “FMV of property received”; “Description of property transferred, if any”; “FMV of property transferred”; “Excess of column (c) over column (e)” |
| 27 | “Total distributions received during your current tax year.” |
| 29 | “Did you receive a Foreign Grantor Trust Beneficiary Statement from the foreign trust with respect to a distribution?” “attach the statement and do not complete the remainder of Part III with respect to that distribution.” “If a foreign nongrantor trust, check” N/A. |
| 30 | “Did you receive a Foreign Nongrantor Trust Beneficiary Statement from the foreign trust with respect to a distribution?” “attach the statement and complete either Schedule A or Schedule B below.” |
| 31 and 39 | “Enter amount from line 27” |
| 32 | “Number of years the trust has been a foreign trust, including the current tax year” |
| 33 | “Enter total distributions received from the foreign trust during the 3 preceding tax years” |
| 34 | “Multiply line 33 by 1.25” |
| 35 | “Average distribution. Divide line 34 by 3.0” |
| 36 | “Amount treated as ordinary income earned in the current tax year. Enter the smaller of line 31 or line 35” |
| 37 | “Amount treated as accumulation distribution. Subtract line 36 from line 31. If zero, do not complete the rest of Part III” |
| 38 | “Applicable number of years of trust. Divide line 32 by 2.0 and enter the result here” |
| 40a and 40b | “Amount treated as ordinary income in the current tax year”; “Qualified dividends” |
| 41a and 41b | “Amount treated as accumulation distribution. If zero, do not complete Schedule C below”; “Amount of line 41a that is tax exempt” |
| 42a to 42d | “Amount treated as net” short-term “capital gain in the current tax year”; “Amount treated as net” long-term “capital gain in the current tax year”; “28% rate gain”; “Unrecaptured section 1250 gain” |
| 43 | “Amount treated as distribution from trust corpus” |
| 45 and 46 | “Amount of foreign trust’s aggregate undistributed net income”; “Amount of foreign trust’s weighted undistributed net income” |
| 47 | “Applicable number of years of trust. Divide line 46 by line 45 and enter the result” |
| 49 | “Enter tax on total accumulation distribution from line 28 of Form 4970.” |
| 50 | “Enter applicable number of years of foreign trust from line 38 or line 47, as applicable (round to nearest half year)” |
| 51 | “Combined interest rate imposed on the total accumulation distribution (see instructions)” |
| 52 | “Interest charge. Multiply the amount on line 49 by the combined interest rate on line 51” |
| 53 | “Tax attributable to accumulation distributions. Add lines 49 and 52.” |
The captions above come from the form. Line 24 columns are described by their captions only; the instructions on line 24 begin “Report any cash or the FMV of other property that you received (actually or constructively, directly or indirectly) from a foreign trust during the current tax year, whether or not taxable”.
Where the number comes from
Line 27 carries into both calculations: lines 31 and 39 each say “Enter amount from line 27”. On Schedule A the instructions say “Consider any portion of a year to be a complete year.” and, for line 32, “If this is the first year that the trust has been a foreign trust, do not complete the rest of Part III.”
If you answered Yes on line 30, “you may complete either Schedule A or Schedule B.” “Generally, if you complete Schedule A in the current year, or did so in prior years, you must continue to complete Schedule A for all future years”. Schedule B has its own conditions: “You may only use Schedule B if” “You attach a copy of the Foreign Nongrantor Trust Beneficiary Statement to this return” and “You have never before used Schedule A for this foreign trust or this foreign trust terminated during the tax year.”
For Schedule C the instructions say “Complete Schedule C if you entered an amount on line 37 or line 41a.” On line 49, “Use Form 4970 as a worksheet and attach it to Form 3520.”
Where it goes next
Line 36 goes to your return: “Enter this amount as ordinary income on your income tax return.” “Report this amount on the appropriate schedule of your income tax return (for example, Schedule E (Form 1040), Part III).”
For line 53 the instructions say “Report this amount as additional tax (ADT) on the appropriate line of your income tax return.” They give this example: “Form 1040 filers include this amount as part of the total for the” Any other taxes line on “Schedule 2 (Form 1040)”. See Form 1040 and Form 1040 line by line for the return itself.
If you own the trust you complete Part II too, on Form 3520 Part II. Gifts and bequests from foreign persons are reported on Form 3520 Part IV.
A worked example
This is an illustration, not an IRS example. Suppose, with invented figures, that the trust has been a foreign trust for more than three years, line 31 is $40,000 (invented, for the computation) and the distributions on line 33 total $60,000 (invented, for the computation). Following the line text above:
| Line | Illustration |
|---|---|
| 31 and 33 (invented inputs) | Line 31 is $40,000 (invented, for the computation) and line 33 is $60,000 (invented, for the computation). |
| 34 | $75,000 (computed), since 1.25 times $60,000 (invented, for the computation) is $75,000 (invented, for the computation) |
| 35 | $25,000 (computed), since $75,000 (invented, for the computation) divided by 3.0 is $25,000 (invented, for the computation) |
| 36 | $25,000 (computed), the smaller of $40,000 (invented, for the computation) and $25,000 (invented, for the computation) |
| 37 | $15,000 (computed), since $40,000 (invented, for the computation) minus $25,000 (invented, for the computation) is $15,000 (invented, for the computation) |
| 38 | If line 32 were 6, line 38 would be 3.0 (6 divided by 2.0) |
Edition and line numbers
This page reads Form 3520 (Rev. December 2023) and the Instructions for Form 3520 (Rev. December 2025), which the IRS says to use with the December 2023 revision of the form; these are the current files irs.gov served on 2026-10-18. Check the edition printed on your own form and use that edition’s line numbers.
Common mistakes
- Completing Part III in full when a complete grantor trust statement came with the distribution. The form says “attach the statement and do not complete the remainder of Part III with respect to that distribution.”
- Switching between Schedule A and Schedule B from year to year. The instructions say “you must continue to complete Schedule A for all future years”
- Leaving off Schedule C after a line 37 amount. The instructions say “Complete Schedule C if you entered an amount on line 37 or line 41a.”
Related: Form 3520, Schedule B line 8 on foreign trust distributions, Form 3520 for a foreign inheritance, Form 1040, and Form 1040 line by line.
Sources
- Form 3520 (Rev. December 2023), Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts: https://www.irs.gov/pub/irs-pdf/f3520.pdf
- Instructions for Form 3520 (Rev. December 2025): https://www.irs.gov/pub/irs-pdf/i3520.pdf
- IRS: About Form 3520: https://www.irs.gov/forms-pubs/about-form-3520
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.