IRS Form 3520 Questions

[cherry39]

I inherited a property (land) abroad in 2022 after my mother died, and the FMV of the land exceeds the threshold. So, I need to file the form 3520. 

I understand that making mistakes in this form could result in penalty. So, would it be better/safer to ask an experienced CPA to do this form? 
Do you know anyone who had to pay the fine?

Question about "Part IV, (b) Description of property received":
>> Would it be enough to write something like this? Do I need to attach something to prove? 
Inherited a land with my brother in country xxx, with registered address of xxx, zoned for residential. 

The land size is 200 square meters, and I own half of it, which is 100 square meters. 

Thank you!

[ShirlynW]

I advise you contact a local tax professional.

[Shogun159]

Did you file the 3520 in 2023? If you did, was it filled out by yourself or a tax professional?

I'm in the same boat as you. Did you also fill out 8938 and write 1 on line 15 of part IV of 8938? I don't mean to scare you or anything, just asking for information.

Also how did you determined the value of the property on line 54 (c)? Was it a estimate or through appraisal?

[DaveF1006]

Yes. If you filled out one form 3520, then you write 1 on line 15 in part 1V of the 8938. For line 54C on the 3520, an appraisal would be best if you can get it. If you didn't, then you will need to rely on your best faith estimate if you are uncertain of the value of the property received. 

8938 Instructions

3520 Instructions

[JenKay]

I'm in a similar situation.

I file the Form 8938 annualy. This year, I need to file the Form 3520 as I  inherited a real estate.

In the Form 3520, should I put the check mark for the following?
C Check if any excepted specified foreign financial assets are reported on this form
As my inheritance is real estate, I think I don't need to add the check mark.

In the Form 8938, Part IV Excepted Specified Foreign Financial Assets section, should I put the number "1" for the following?

15 Number of Forms 3520

We do not (and cannot) use the Form 8938 for real estate. So the inheritance that I report in the Form 3520 is excluded naturally. So, I think  that I don't need to put the number "1" in the Form 8938 for my case which involves only real estate. 

Does anyone know what the right thing to do is? What is the definition of "Financial Assets" in these contexts?

[SusanY1]

You are correct, you do not include the number on on the Form 8938. That indicator is to inform the IRS that an account is listed on 3520 that would otherwise be on Form 8398.  

You also do not need to check the box on Form 3520 for "excepted specified foreign financial assets".  You have inherited a real asset, rather than a financial one.

This exception is for things such as branches of US banks abroad, US military banking facilities, Correspondent/Nostro accounts (a type of bank-to-bank settlement account), accounts held by governmental entities, and a few other oddities that aren't common for individual taxpayers.  

[Shogun159]

Is what you said above also apply to real estate gift?

[SusanY1]

Yes, if the real estate is valued at $100,000 or more (or the real estate plus other inherited assets is over $100,000), you should list those assets on the form.  

If you have an appraisal, list the value from that plus a brief description that makes sense to you ("home in City, Province, Country" is fine). If you don't have an appraisal then your best estimate is fine.  If in doubt, over estimate - you won't pay tax on this amount as this form is just for informational purposes.  

@Shogun159 

 

[Shogun159]

So if I file my 3520 in for gifted foreign real estate in 2024. I've decided to sell it in 2024 valued around $200,000. I will deposit that amount into foreign bank account where my real estate resides. And transfer that same amount into my US bank account also in 2024.  The question is:

Come 2025, what forms do I need to file? 

1. Do I need to file 3520 again since I open a foreign bank account with 200k deposited it in?

2. Do I also file 8938 since it is above threshold?