Form 3520 Real Estate Inheritance

[SSC2024]

My question is regarding the year i need to put foreign inherited property on form 3520.

My mother who lived abroad passed away late 2023. My siblings and I are on the will to inherit her home equally. At this point nothing has been done to physically put the property in our name, no change of title, property taxes etc. Everything is currently still in her name as we were still getting documents ready to start the process of getting it transferred.  We also don't have a fair market value as no appraisal has yet been done either, but it will be higher than the $100000 threshold for reporting.

Does the property need to  be shown on the 2023 Form 3520 or when we actually have the property distributed in our name? 

Than you in advance.

[SusanY1]

Generally, you report the receipt of the property when the transfer is made.  However, this isn't always as straightforward as it may seem when it comes to distributions from estates. 

Local law dictates when you have technical ownership rights to the property.  In some cases, this is the date of death of the decedent.   In other cases, it is not until you have the title to the property.  

If you're in doubt, file the form for 2023 with your best guess as to the value of your share of the property to be received, and then file again when you have more definite information. It's better to report this twice than to risk penalties for late filing.  

For gifts and inheritances, you complete the first part of the form through line 1k and then skip to Part IV on page 6.  Be sure to sign and date the form before mailing to: 

Internal Revenue Service

P.O. Box 409101

Odgen, UT 84409 

[SSC2024]

Okay,

Thank you!

[SSC2024]

I have a follow up Question to this. In Form 8938 section IV it asks if any specified assets are being reported to include the number of forms being reported. According the instructions for form 8938

"If you reported a specified foreign financial asset on one or more of the following forms, enter the number of forms filed"

Do i need to put a number for form 3520 even though i am not listing any "specified foreign assets". Just the values for inheritance? My assumption is no, but wanted to confirm.

Turbo tax also seems to prevent electronic filing if that box is checked, even though form 3520 needs to be filed separately to a different address.

[SusanY1]

You are correct, you do not need to indicate anything here for Form 3520.  You would only indicate that you filed a 3520 for assets that would otherwise be reported on Form 8938 - it's a way of letting the IRS know that something is omitted here, because it's reported elsewhere which isn't applicable in your case.