Foreign inheritances are subject to estate taxes under the following conditions:
• The donor (the deceased person whose property you are inheriting) is a citizen or resident of the United States — in which case their entire world-wide estate is subject to U.S. estate taxes.
• The estate includes U.S. situs property (property located in the United States or issued in the United States in the case of stocks and similar assets) — in which case only the U.S. situs property is subject to estate taxes.
When the inherited money is transferred to a U.S. account, as long as it is reported properly, this money is not subject to estate tax unless one of the two conditions above apply.
Normally you would report it on Schedule D. Your cost basis for the property is the same as the selling price so your gain is zero.
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