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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7266
Experience:  15years with H & R Block. Divisional leader, Instructor
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My father is a non-resident alien (United Arab Emirates Citizen)

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My father is a non-resident alien (United Arab Emirates Citizen) who would like to transfer all of his assets to me and my brother (we are both US Citizens) upon his death according to his will. My mother is a US citizen. Both of my parents reside in Dubai, United Arab Emirates.

My Father was a green card holder, however in conversations with certain government officials, because he has not used his green card or entered the country in 17 years, I am given to understand that the green card would be considered forfeited. He has not filed a US Tax Return since he left the country 17 years ago.

The Only Assets he has are cash balances in bank totaling 6 Million Dollars. What would the tax treatment be assuming he is a non-resident alien? What if for some reason he is still considered to be a US Resident (Green Card Holder)?

What if my father were to send the money as a gift right now (before his death), what would be the tax implications? Are there any limitations on the amount that can be given as a gift or is it unlimited? Is there a difference between sending the money as a gift as opposed to getting it through an inheritance? Do I need any documentation to prove it’s a gift, such as letters etc. (***This issue is of utmost importance***)

Is there any incentive for my brother and I to open foreign bank accounts and then transfer the money to the US versus a direct transfer from my father’s personal accounts to our personal accounts in the US?

Would IRS form number 3520 and form TD F- 90-22-1 suffice or are there other disclosures we must make upon filing our taxes?

Please be as detailed as possible in your answer as I am a CPA as well and will be able to understand any complexities that may be present. Thank you and I look forward to perhaps the beginning of a fruitful business relationship.
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Hello and thank you for using Just Answer,

What would the tax treatment be assuming he is a non-resident alien? What if for some reason he is still considered to be a US Resident (Green Card Holder)?

Assuming NonResident, his estate would not be taxable in the US. Green card holder that was in the US then left is still under US taxation unless they physically surrendered their Green Card. The estate would be taxable to the US, not to mention all the taxes that had not been paid by the Green card holder for all the years not filed and the FBAR and FATCA (both reporting for foreign held accounts). If the US beneficiaries receive amounts from previous Green card Holder within the time still remaining for the previous US person to be reporting income the beneficiaries will owe the tax.
What if my father were to send the money as a gift right now

No taxation to the receivers, only reporting if amount over $100,000 using Form 3520 if the giver is nonresident alien. If green card holder no reporting by receivers but Form 709 for the sender to report and pay gift tax on the amounts over the annual limits ($13,000 per person they give money to) and lifetime limits ($5mil right now subject to change). If your father was still under US taxation and you receive the gift you will be responsible for the tax if he is still considered a US person and the IRS feels he left the US for tax reasons. This feeling would come from the amount of money he continued to earn after he left the US.

Your father's status is dependent on how long he held that Green card. 877A(g)(2) provides that the term "expatriate" means (1) any U.S. citizen who relinquishes his or her citizenship and (2) any long-term resident of the United States who ceases to be a lawful permanent resident of the United States (within the meaning of section 7701(b)(6), as amended). Pursuant to section 877A(g)(5), a long-term resident is an individual who is a lawful permanent resident of the United States in at least 8 taxable years during the period of 15 taxable years ending with the taxable year that includes the expatriation date.

Is there any incentive for my brother and I to open foreign bank accounts and then transfer the money to the US versus a direct transfer from my father’s personal accounts to our personal accounts in the US?
You open yourselves up to having to report under FBAR and FATCA and it would still be a gift from your father.

 

As you are a CPA you need to look first to see if your father can still be deemed a US person. If he is, he and your mother could agree to split the gifts there by possible staying under the lifetime amount ($5mil for each of them). If he is not still a US person and the money does not come from a joint account your mother would not need to report anything.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7266
Experience: 15years with H & R Block. Divisional leader, Instructor
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