Form 3520 - when to file what

[epierpa]

A foreign relative passed away in 2022 and I inherited portions of apartments and money.

The apartments were registered under my name in 2022, but the money was transferred to me in 2023. 

I have a tax extension until Oct 15 2023, for the 2022 taxes.

I understand that I need to file form 3520 by Oct 15 separately from my taxes directly to IRS.

Do I need to include the money received during 2023 in my form 3520 sent on Oct 2023, or only the apartments?

Will I have to file another 3520 next year for the money that was  transferred to me in 2023?

Thanks

[tagteam]

@pk

[pk · Accepted solution]

@epierpa , assuming that you are US person ( citizen., GreenCard, Resident for Tax Purposes ), what I get from you post is that you

(a) received ownership  of Capital asset ( an apartment )  and Cash  as inheritance in 2022.

(b) the apartment / condo was registered  in your name in 2022 ( I assume that this was post  demise of the decedent ) -- your basis in the property is FMV of the asset on the  date of passing of  the decedent.   This requires no reporting  ( for US tax purposes )  --- however  if you have income from this asset  , you will have to recognize those earnings  ( Schedule-E  for rental income ) and at disposal ( Schedule-D and/or form 4787 )

(b) you also received cash as part of inheritance ----   if you meet the threshold ( => than US$ 100,000 ) , then  you must recognize this on form 3520 in the year when you had  "constructive receipt " --- a check dated, wire transfer etc. etc..

(c) if the transfer of the cash occurred in 2022, then you report in 2022 and no further, if in 2023 ( transferred from the estate of the deceased ), then you report this ( when you have met the threshold )   only in 2023.

(d) if the amounts ( cash from the estate of the deceased )  went through a foreign bank account ( that you own  or have signature authority  over )  you may need to file   FBAR  ( form 114 at FinCen.gov ) and/or  FATCA  ( form 8938 along with your return for the tax year ).   Note than none of these are tax events  but reporting is essential  ( because  non-reporting when clearly required to may result in onerous  penalties.

Does this answer you questions on the subject ?   Is there more  one of us can do for you ?

[epierpa]

Thanks, I think you answered.

I understand that owing the apartment with start date in 2022 does not trigger per se the need of filing form 3520, so I’ll wait until next tax cycle to produce it if I got more than 100k$ in cash during 2023.

And indeed any rental income needs to be included in the taxes for 2022.