Form 3520 for inheritance

[fkhalilz]

Hello,

I am a citizen of the US and live in California. My father, who was a citizen and resident of a foreign country, passed away in 2022, and a part of my inheritance which was a real estate property finally got sold in 2023 and I received my portion of the inheritance (over $100,000) thru wire transfers by my sibling to my bank account in the US. There are more properties in the inheritance that are not sold yet, but they may be sold in the future and divided among the beneficiaries.

Please let me know if below is the correct way to fill out form 3520:

• Top section A: check "Initial return". Do I need to also check "Final return" even though more transfers may happen in the future years as other real estate properties get sold and divided among beneficiaries?
• Top section B: check "Individual"
• Top section C: Leave the box unchecked
• In section below "Check all applicable boxes" after Section C: check the 4th box which deals with receiving gifts or bequests from a foreign person.

Thanks!

[fkhalilz]

Dear tax experts,

I would be greatful if you took the tie to answer my questions above.

Thank you!

[SusanY1]

For the top Section A, leave this blank since you're not reporting transactions related to a trust. 

For Section B, yes, you will indicate individual.  

For Section C, you are correct to leave that blank. 

You are again correct that you fill in the last box in that top section "You are a U.S. person who, during the current tax year, received certain gifts or bequests from a foreign person."

You will then skip to the last page, Section IV.  

In the case of the cash being transferred from your sister, simply enter the date of the transfer, "cash" as description, and the amount. 

Be sure to sign and date the form where indicated, then mail to:


Internal Revenue Service

PO BOX 409101

Ogden, UT 84409
 

[fkhalilz]

Thank you very much for your response.

[fkhalilz]

@SusanY1 

I received the inheritance thru 6 different wire transfers to my US bank account seperated by a approximately a week of one another. Should I use the date of the first or last wire transfer to answer question 54a on the form?

Thank you!

[SusanY1]

I would enter the range of dates such as June-Sept, 2024 or 5-15 June, 2024 followed by the total of all of the transfers.  Alternately you could list them separately but that would require an attachment to the form, which isn't really necessary. 

As long as you use a reasonable means to report all total assets on this form, it should satisfy the IRS.  

[fkhalilz]

@SusanY1 ,

Thank you very much for all the helpful information!

[Tackaberry]

@SusanY1     I have a somewhat related question, although unrelated to real estate. My mother-in-law passed away last year, so her bank opened an estate account, i.e. it had one or more executors (aka "liquidators") in charge of specifying the distributions to heirs. Does the IRS consider the estate account to be a foreign trust ? My wife (US resident) definitely needs to file a 3520 this year, but I'm not sure about Form 3520-A when it comes to foreign estate accounts and inheritances. 

[Tackaberry]

To clarify, the decedent, her bank, and the estate account were in Canada.

My thinking is that a trust is a legal document or agreement, created by a lawyer or maybe a notary. So an estate account created by a bank official is NOT considered to be a trust, and Form 3520-A is not relevant. However any US heir needs to file form 3520.

TurboTax just notified me that, since 3520 needs to be filed, I cannot e-file this year. This is surprising and confounding because I believe the two documents (tax return and 3520 form) get mailed to Kansas City MO and Ogden UT, respectively. I had hoped to e-file the return and paper-mail the affiliated 3520.

[DaveF1006]

No. All she would need to do is file part 1 and part 1V of the 3520.  She would not be required to file a 3520-A because she is not the owner of the Trust Estate.