How to file a foreign gift to my foreign account

[orange10394]

Grandma gave me a cash gift more than $100K to my foreign account (balance $2 before gift transfered in) , I later transfer all balance including cash gift to my U.S. account (self to self). Which follwoing way is correct filing for my case:
1)Only check mark form 3520 in Form 8938 Part IV + Mail out form 3520+ eFile Form 114
(TurboTax told me do not list the account in 8938 if file 3520)
2) Form 8938 list all cash amount received, also check mark 3520 on Part IV in form 8938 + Mail out 3520 + eFile Form 114
3) Only list cash amount in my foreign account, DO NOT check mark 3520 in Part IV + eFile Form 114

My tax advisor had only seen people got foreign gift to U.S. bank directly, so she told me that I do not need to file 3520 if the foreign gift to my Foreign account. Appreciate if some one can help me with my case.

[GeoffreyG]

The correct answer to your question is detailed as the option # 1 that you propose in your inquiry.  Since the gift was over $100,000, and your grandmother is either a "foreign person" as defined by the IRS, or the gift went directly into a foreign financial account (before being later transferred to a US-based account), then Form 3520 is required here.  As a CPA myself, I respectfully do not agree with your tax advisor on this particular point, and would politely direct them to re-read Page 1 of the Form 3520 instructions.

I do agree with you, and TurboTax, however, that IRS Form 8938 is not required here, as again according to the Form 3520 instructions, there is some relief granted from "duplicative reporting" in that Form 8938 is not necessary where a foreign financial account is otherwise identified on Form 3520, filed timely in that same tax year.

I also agree that FinCen Form 114 (a US Treasury Department internet-based disclosure of foreign accounts) is required, as filing Form 3520 does not exempt you from this, and the amount of the foreign account was definitely over the $10,000 filing threshold at its maximum value during the year.  Here is a courtesy link to that reporting webpage:

https://www.fincen.gov/report-foreign-bank-and-financial-accounts

Finally, if your grandmother's gift money is now held at a US-bank or institution, and is no longer a foreign financial asset, then you will have no such reporting or disclosure requirements to file for next year, as a result of just this item.

Thank you for asking about this important topic.

[orange10394]

Appreciate so much for your response!  I have a further question: Since my funds in foreign account transfered to my U.S. account in $50K each transfer (because the currency control, the bank only allow max of $50K per transfer), so my 3520 should show the gift as one total number or should break into pieces to reflect each transfer amount? Also do I need to give the full name of my grandma in the description of the gift?

[GeoffreyG]

Hello orange10394:

Thank you for your kind words, and for the follow-up questions.

You only really need to enter the gift as a single entry on Form 3520.  In other words, don't break it up into smaller amounts, even if that is how you ultimately had to transfer it out of your foreign account, due to currency controls.

Also, I would suggest using the full (legal) name of your grandmother on the tax forms, rather than an abbreviation or attempting to shorten it.  The exception to that would be if there is not enough space in an electronic data field to accommodate her whole name on the particular tax form, in which case you would have no choice but to (selectively) abbreviate.

Thanks again!

[fffggghhh]

Hi @GeoffreyG ,

I am not the original poster, but I am in the same situation and have a question, if you don't mind me asking:

I don't see any field on the 3520form where I could put in my relative's name. Box 2a says "Foreign Trust name" - but my money was gifted by my father as a person not as a trust.

Thank you