Gifts from Foreign Corporations in 2026: The $17,339 Threshold
Tax Research Desk
The number
For 2024, the Form 3520 Part IV reporting threshold for gifts from a foreign corporation or a foreign partnership is $17,339. The IRS adjusts this number for inflation each year (it was $17,339 in 2024, $18,567 in 2025, anticipated higher in 2026).
This threshold is much lower than the $100,000 threshold for gifts from foreign individuals or foreign estates — because the IRS treats entity-to-individual transfers with extra suspicion. Foreign corporations gifting money to US-person owners or relatives can be a workaround for hiding income.
What counts
- A distribution from a foreign closely-held corporation that is not classified as a dividend or wage.
- A "bonus" from a foreign-based employer paid as a corporate gift.
- A distribution from a foreign partnership to a non-partner that has no underlying business purpose.
- A guaranteed payment from a foreign partnership that is not for services rendered.
- A loan from a foreign corporation that is later forgiven.
What does NOT count
- Wages or salary from a foreign employer. That is W-2-equivalent income and goes on Form 1040 line 1, not Form 3520.
- Dividends from a foreign corporation in which you are a shareholder. Those are dividends and report on Schedule B + the 1040, not Form 3520.
- Pro-rata distributions from a foreign partnership in which you are a partner. Those are partnership distributions and report on Schedule K-1 + the 1040, not Form 3520.
- Loans from a foreign corporation that are bona-fide debt. Documented at market rate, with real repayment expectation, not a disguised distribution.
The general principle: if there is an underlying business or compensation reason for the transfer, it goes on the relevant tax-return line. If there is no underlying reason — it is a transfer for "love and affection" from a corporation, basically a gift — it goes on Form 3520.
Reporting on the form
Gifts from foreign corporations or partnerships go on Line 55 of Form 3520 Part IV. Line 55 has more columns than Line 54 because it asks for additional information about the corporate or partnership donor:
| Column | What to enter |
|---|---|
| (a) | Name of foreign corporation or partnership |
| (b) | Address of foreign corporation or partnership |
| (c) | Country of organization |
| (d) | Date of gift |
| (e) | Description of property |
| (f) | Fair market value in USD |
You need the foreign entity's name and country of organization. If you do not have an address, the IRS instructions say to enter what you have and "Unknown" for missing parts. But the IRS expects you to make reasonable inquiry.
The recharacterization risk
When the IRS sees a "gift" from a foreign corporation, they sometimes recharacterize it as:
- A dividend (if you are a shareholder) — fully taxable income, not a gift.
- A disguised wage (if you provided services) — taxable income subject to employment taxes.
- A constructive dividend (if you are a related party of a shareholder but not directly a shareholder yourself).
Recharacterization happens during examination, after you have already filed. The defense against recharacterization is to be able to show the transfer was genuinely without consideration — no services, no shareholder status, no quid pro quo.
If you anticipate the IRS might recharacterize, file Form 3520 conservatively AND consider whether the transfer should also be reported on another line of your 1040.
Aggregation across foreign corporations
The $17,339 threshold applies to gifts from any foreign corporation or foreign partnership in aggregate, related or not. The instructions are less generous about aggregation than for individual gifts — there is no family-attribution exception for entities.
Example: You receive $9,000 from your foreign cousin's foreign corporation and $9,000 from a separate foreign corporation owned by a foreign business associate. Total $18,000 > $17,339 → you file, listing both donors separately.
How our app handles it
When you enter a transaction in the question flow, we ask "Is this from an individual or estate, or from a corporation or partnership?" Selecting corporation/partnership routes the transaction to Line 55 of the generated PDF instead of Line 54, and adjusts the threshold check.
3520file is software, not a CPA firm or law firm. We prepare IRS Form 3520 based on the facts you provide. For advice on your specific situation, talk to a tax attorney or CPA. The above is plain-English explanation, not tax advice.