I agree. The IRS will only tax the real estate when you sell it, so they don't need to know about it now. The IRS wants to know about large amounts of cash coming into the hands of US taxpayers, partly to watch out for money laundering and partly to watch out for tax compliance issues -- undisclosed money might be business profits or money from selling an asset. So they want you to declare cash that is otherwise not taxed (gifts and estates) just to help keep track.
