topic Form 3520 questions in Deductions & credits

Form 3520 questions

2157es — Tue, 10 Feb 2026 10:19:04 GMT

My situation:

I am a US citizen/resident living in the USA. I inherited a foreign property 2016 ( a nonresident alien)which I reported estimated FMV on 2017 form 3520, I sold the property 2023, and was a LOSS, then the net proceeds was deposited in my foreign bank for few months until be able to wire directly on Dec to my us bank account.

My question:

1. Do I need to fill Form 8938 for FBAR since it only in foreign bank for few months and transferred to my US bank on Dec?

2. Do I need to fill the Form 8949 since it a LOSS, or other form?

3. Do I need to file form 3520 again (its more than $100,000)since I already reported the inheritance property on 2017, but now got the cash?

Thank you advance for your help

Re: Form 3520 questions

Opus 17 — Thu, 04 Jan 2024 00:22:04 GMT

1. If you owned a foreign bank account for even 1 day during 2023 that contained more than $10,000 US-equivalent, you need to file the FBAR.

2. You report the sale of the property according to US law, regardless of what other reporting requirements might exist overseas. Your cost basis when you inherited the property will generally be the fair market value at the time. You don't get an adjustment for inflation under US law. If you sold the property for less than your cost basis, you have a capital loss, why not deduct it?

But, note that you can't deduct a loss on personal property, only investment property. This would be personal property if, for example, it was a family home, and other family members stayed their rent free, even occasionally. Or you used it as a vacation home. It could be treated as an investment property if you rented it out after inheriting it, or it was vacant--not used as a personal home by yourself or family but waiting for the right time to sell.

If you treat this as investment property and you have a loss, you can report the loss and take a tax deduction. However, if audited, you will be asked to prove your cost basis, that is to say, the fair market value when you inherited it. Did you get an appraisal at the time? Can you now get a retroactive appraisal using historical market data from a qualified appraiser in that country?

3. No, you only inherited the property once. Selling it does not trigger a requirement for another form 3520 since you were selling your own property.

Re: Form 3520 questions

2157es — Thu, 04 Jan 2024 14:39:38 GMT

Thank you so much for your reply!

especially for question 3, which we thought we need to fill again with 3520!

then for question 1, since our account was over 150 k during the year, Do we need to file Both FBAR and also form 8398? Thanks!

Re: Form 3520 questions

Opus 17 — Thu, 04 Jan 2024 14:53:29 GMT

If you closed the foreign account before December 31 (or the balance was less than the specified threshold on that date) then form 8398 is not required. See this chart.

https://www.irs.gov/businesses/comparison-of-form-8938-and-fbar-requirements