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Form 3520 - How to fill out for inheritance

Hello,

 

I am a citizen and resident 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.

 

I have read the form 3520 instructions and have reviewed most of the related questions regarding form 3520 posted by the Turbotax Community already. 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.

 

  • In section about "applicable identifying information" after the 4th box mentioned above:
    •    1a: put my full name
    •    1b: put my SSN
    •    1c/e/f/g/h: put my home address in California
    •    1d: put my wife's SSN (This inheritance belongs to me only. Is my wife's SSN necessary here? We are filing as married-filing-jointly.)
    •    1i: Leave the box unchecked because even though we are filing a joint return, it is not a joint 3520. Is that a  correct understanding?
    •    1j/k: Leave the 2 boxes unchecked as I will by submiting this form prior to April 15, 2023. No extensions.
  • Sections 2/3: Leave blank as there were no foreign trust or US agent involved.
  • Section 4: Leave blank as the decedent (my father) was not a US person.

 

  • Part I/II/III: Leave blank.

 

  • Part IV, 54: Mark the "Yes" box as the inheritance was more than $100,000.
  • Part IV, 54a: Put the date the property got sold in 2023.
  • Part IV, 54b: put "Cash". Is this correct, or should I describe the real estate property that was sold?
  • Part IV, 54c: The total amount of cash received into my bank account thru wire transfers. Is this correct, or do I need to put the FMV of the entire real estate property - not just my portion of the inheritance?
  • Part IV, 54 "Total": Put the same total amount of cash received here again.
  • Part IV, 55: Check "No" box.
  • Part IV, 56: Check "No" box.

My 2nd question is about whether the state of California has a similar tax form, or other requirements for reporting inheritance, and whether it would be taxable by the state.

 

I know this is a long list, and I appreciate your time and effort.

 

Thank you!

 

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1 Reply
CatinaT1
Employee Tax Expert

Form 3520 - How to fill out for inheritance

This form is not supported by TurboTax. Which IRS forms are not included in TurboTax?

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