@ParkNYC wrote:
Thank you @pk for clarification, I was concern about calculating the basis and fast changing currency exchange rates. For example if i calculate the basis on the day of death and in late January, there is a 5% difference in property value because of the FX exchange rate change. So for example, if the property is valued in US dollars $100,000 on December 20th (day of death) it will change and it's valued $105,000 on January 20th (date of receiving the gift). This can change more drastically if the property value is much higher that $100,000.
Also, do foreign gifts and inheritances can still qualify for a step-up basis?
Thanks,
The value of the bequest is the value as of the date of the previous owner's death in US$ on that day, or the value in US$ on the alternative date of valuation. I don't think the alternative date of valuation applies here, because we aren't talking about hard to value assets. It should be pretty easy to determine the value of real estate (3/8 share of a house, I think?).
To give some context: Some assets are illiquid (not easily sold or traded) and it may be difficult to determine their value right away. Such as a privately held business, or certain complex investments that aren't listed on a public market, or certain collectibles, or the future value of royalties. It may take the executor some time to unwind complex financial relationships and actually determine the value of certain property. That does not seem to be the case here.
Regardless of the date that you report the bequest (date of death or date of constructive receipt), the value you will report is the value in US$ on the date of the person's death. The regulation that determines value is independent of the reporting requirement.
Yes, you get a stepped-up basis in inherited property. If you are a US taxpayer, US tax laws apply to you no matter where the property is located. If local laws are different, you may pay a different amount of local income tax when you sell the property, but you can claim a tax credit for foreign taxes paid when you report the sale and pay the US tax on your US tax return.
