Foreign Property Inheritance Tax Situation

[NavierAndStokes]

Hello,

I Inherited a property in Mexico technically in 2019, but it wasn't under my name until 2024 when it was transferred to me and sold at the same time on the same day. 

I am a US citizen for tax purposes.

The sale was approximately for 110,000 USD. I paid 25% tax plus fees on that, leaving the total gain at around 77,000 USD. It's complicated too because fees were paid in pesos and with varying currency exchange rates. 

I am uncertain if I have to report this as a 1099-B or not. If I do, I am confused on the "Fair market value when previous owner passed away". I can possibly get some estimates for this, but given currency fluctuations and that it was way back in 2019 I am not sure how accurately I can report that. My guess from what I've seen is that the value is likely somewhat unchanged since then, likely leaving me with a paper "net loss".

Additionally, should I file a 3520? My understanding is that is only required if I received an amount over 100,000 USD (which I did not). 

[MaryK4]

You probably do not have a reportable transaction, but you will want to have all the records in order to prove you do not owe tax. The number one thing you need is your basis.  

Your basis would be the fair market value on the date of death (or alternative valuation date) so it would be the 2019 value, so you will want to find records.  You may be able to find "comps" for neighboring properties sold near the date.  I would recommend finding a qualified appraiser, the fees will be worth the tax savings.

If there is tax due, you may be able to get a credit for the taxes paid, but once again, this would be contingent on the amount of gain if any.

You are correct that you would not have to file the 3520.