Inheritance/gift reporting
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Anonymous
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A close relative in a foreign country passed away recently and we are set to inherit some assets.. Based on what our lawyer there said and our travel schedule, we will be able to liquidate and transfer financial assets to our names by the end of this year (Value of about $80K). Real estate transfer won't happen until sometime next year (our share valued at about $50K).
How do we handle Form 3520 reporting (which expects us to report more than $100K in gifts or inheritance from a non-resident)? Actual receipts for each year would be less than the threshold but combined, exceed. And yes, we will be getting an accountant to deal with this but not yet. |
Anonymous
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You are cash basis tax payer. You should report in the year received.
Your accountant will be better positioned to know if there is an exception to this rule (or even just a "best practice" used in the industry to avoid potential issues). |
Anonymous
Thanks for the quick response. My current accountant and the other he referred us to (who supposedly deals with people having assets in foreign countries) were not really aware of the specifics of this reporting. We are looking for one.. |
Anonymous
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OP again.. Instead of focusing on form 3520, can someone answer how this would be handled in the US for an individual taxpayer?
If money owed to me is received across multiple years, should it be recognized in year 1? e.g. A decision is made by a lender in March 2025 to forgive my debts. Specific forgiveness resolutions/approval are passed in 2025 for cash loans and for asset loans in 2026. Should the entire value of the forgiven debt be recognized as income in 2025 or just the cash portion in 2025? (Hope this scenario makes sense. Not an accountant). |
Anonymous
| In year forgiven |