Miscellaneous income or received Gift

[jomarego76]

I have a very peculiar personal tax situation.  My father who isn't a US citizen for tax purposes nor he lives in the USA, sold a property located outside the USA.  The buyer, who is an US resident purchased the property and instead of transferring the funds to my father, he transferred the funds to my US bank account as per my father's instructions.  My father has given me this money as a gift or sort of an early inheritance, but I'm not sure how to categorize it.  The total amount is $50K USD.   I tried to correlate it to a miscellaneous income but none of the alternatives really meet the scenario.  My father has no relation whatsoever with the US in terms of taxes , I don't know if I can simply indicate to the IRS that this is a foreign gift with the caveat that the funds originated domestically (US bank to bank transaction).  Any suggestion about how to handle this situation will be appreciated.

[Opus 17]

You don't need to do anything.  This is a gift from your father to you.  Under US tax law, gifts are not taxable to the recipient.  (If the giver pays tax in his home country, that is his problem.)

Gifts from non-US persons only need to be reported by the recipient if the amount is more than $100,000 in a year (or more than $14,000 if the gift is from a foreign corporation).  So you don't have any responsibilities regarding this gift.

Now, for IRS purposes, this will look on paper as though it is a gift from a US person (the buyer) to you.  In that case, the giver is required to file a gift tax return if the amount of the gift is more than $15,000 per person per year, but the recipient still has no reporting or tax responsibilities.  The fact that it looks like a gift from the buyer to you, but was actually a purchase price paid to your father, is something for the buyer to deal with, not you.

(Also note that if the reason your father did it this way is to avoid paying his own income tax on the proceeds, that is between him and the tax authorities of his home country, and also does not involve you.  However, I would save all the documents and emails related to this purchase and gift for 7 years, just in case you need to prove something to the IRS.)

[LoganathanB]

You need not report to IRS as the gift received by you is below the threshold for reporting.

Click on the link for more information

Form 3520

[jomarego76]

Opus 17

Thank you for the feedback.  It makes total sense what you replied.  The property my father sold was his primary home; hence, no taxes charged at his home country.

Would you recommend I try to get in contact with the buyer in the US to advice him to file a gift tax return for the 50k paid? Probably, I'm not even responsible for providing any advice to the buyer to do a gift tax return.

Thanks

[Opus 17]

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@jomarego76 wrote:

Opus 17

Thank you for the feedback.  It makes total sense what you replied.  The property my father sold was his primary home; hence, no taxes charged at his home country.

Would you recommend I try to get in contact with the buyer in the US to advice him to file a gift tax return for the 50k paid? Probably, I'm not even responsible for providing any advice to the buyer to do a gift tax return.

Thanks

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You have no responsibility to the buyer.  Stay out of it.