RESP Reporting

[dmendel]

A couple years ago I hired an accountant to complete 3520 and 3520A for an RESP I own for my son (I live in Canada). Last year I just used it as a model for completing the forms, and was planning to do the same this year when, upon closer examination, I am not sure it was done correctly:

1. On 3520 they reported contribution as a "gratuitous transfer" with FMV of property returned as equal to my contribution. How can this be gratuitous? Should this not be a transfer in exchange for an obligation?

2. Did not report any distributions (Part III of 3520) even though the account earned interest of about $100. (However, if the transfer was more than the interest received in a given year, would this not be $0 in distributions?)

3. On 3520A, Part II, they listed distribution of $0 to my son as beneficiary, and not to me as owner.

4. They did not complete page 3 of 3520A (Foreign Grantor Trust Owner Statement).

5. They attached a statement to the return stating that the trust is an RESP that is similar to RRSP and therefore I "elect protection from US taxation on undistributed income in the plan pursuant to Article XVIII (7) of the 1980 Canada/US tax convention." The statement also indicates that no monies have been distributed during the year (again, even though there was interest earned of $100).

My reading is that the US won't accept this statement. I assume that as a result of this, they never told me that I had to report the interest earned on the account on my 1040. But seems that I do.

[nelsona]

There is NO doubt that RESPs are continuously taxable in US.