Yes, you do have much work to do. Let's start with reporting the sale of the house. For the cost basis, you would use the Fair Market Value on the date of death. There is no depreciation adjustment between 2021-2023. To report this sale, go to:
- Federal
- Wages and Income
- Investment Income
- Stocks, Mutual Funds, Bonds, Other
Usually I give additional instructions how to complete this section but these threads allow a limited amount of information. If you do need additional information, please reach out to us again.
To claim a foreign tax credit for the taxes paid:
- Go to Federal
- Deductions and credits
- Estimate and other taxes paid
- Foreign Tax Credit>start or revisit
- Be sure to report the full amount of your proceeds when it asks for the gross income amount.
Again there is not enough room in this post to list complete instructions. If you need additional instruction, please reach out.
Yes you do need to file an FBAR here. You may need to file a 8938 if:
- You are filing single.
- If you had a bank account in India, that had more than $75,000 at any time during the year. This is important because if you deposited the money you received from the sale into a bank account before transferring to the US, then there is a 8938 reporting requirement. Also if your Indian Bank Account had more than $50,000 on the last day of the US calendar year, this needs to be reported on 8938.
As far form 3520, that should have been filed in 2021 when the inheritance was first received. Did you file one for that year? I would hire a tax professional for this as this can result in a heavy fine if you didn't file in 2021.
You may also file a 3520 this year and as you complete part 1V on the 3520, you list the date you received the inheritance in 2021. You won't be able to electronically file this return with this form so I would include a detailed statement why you didn't file this in 2021. If the IRS sends you a letter regarding a penalty, you may request penalty relief. Again, I strongly suggest to hire a tax professional to help you with this matter.
IRS-Penalty Relief
Form 3520 to download and complete
Instructions for Form 3520
Instructions for Form 8938
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