Hello!
I have a joint U.S. bank account with my father. I am a Green Card holder, while my father is a nonresident alien residing abroad. My father owns, deposits, and manages the funds in this account.
Last year my father told me to transfer $350,000 from the joint account to a high-yield savings account under my name at the same bank, intending to earn interest before returning the funds to the joint account. At the time, we were unaware of potential gift tax implications.
I understand that I must report and pay taxes on the interest earned, but I need clarification on the following points:
- Would this transfer be considered a gift from my father to me?
- If I return the funds to the joint account, does it still qualify as a gift?
- If deemed a gift, am I required to file Form 3520?
- Does my father have any U.S. tax reporting obligations for this transfer?
Regarding point #4, I’ve encountered conflicting interpretations about whether a U.S. bank account qualifies as a tangible asset for nonresident aliens concerning U.S. gift tax. The IRS states, “An NRNC of the United States is subject to gift and GST taxes for gifts of tangible property situated in the United States.” However, some sources suggest that funds in a U.S. bank account are considered intangible, while others claim they are tangible.
Any help in answering these questions would be greatly appreciated!
References:
1. https://sommers-taxapedia.com/archives/summary-of-the-law-on-gifts-from-a-non-u-s-taxpayer/
2. https://www.greenbacktaxservices.com/knowledge-center/form-709/#:~:text=the%20exemption%20decreases....
3. https://ttlc.intuit.com/community/taxes/discussion/us-bank-account-held-by-foreigner-considered-prop...
4. https://www.law.cornell.edu/cfr/text/26/25.2511-3
