You must file Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts, if, during the current tax year, you treat the receipt of money or other property above certain amounts as a foreign gift or bequest. Include on Form 3520:
Link to form 3520/instructions:
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Your answer is incomplete and not helpful. What are the tax consequences to the nonresident alien spouse? This is family money - although in a separate account controlled by the nonresident alien spouse- and preservation of principal is of concern. Is the gift a good idea vis-a-vis tax consequences?
Consider tax consequences for both spouses - perhaps it would be better to not make the gift and keep the money in a separate account in name of the nonresident alien spouse?
These people are husband and wife, living in Kenya. Wife is USC. Money is in the USA, result of a real estate investment by the nonresident alien spouse of the USC. USA income tax has been paid. We are not concerned about taxes in Kenya. It looks like there may be a tax on the transfer (gift) in the USA by the nonresident alien of 41 to 45 %. Is this not true? Can the gift be made, ie, transfer the cash from Texas bank account to US citizen spouse's Ohio account without tax consequences? Please give IRS code citations supporting your answer.
Please see for reference IRS publication 525 page 31 (left column)- http://www.irs.gov/pub/irs-pdf/p525.pdf
Thank you, LEV. Your's is the first answer to really address the issue. Just to be clear, you are saying there is no gift tax consequence if the US cash (proceeds of a one-time real estate sale, income tax return filed and tax fully paid) presently in a Texas bank account (separate property of the nonresident alien spouse) is transferred to a brokerage account of the US Citizen spouse located in Ohio. Both spouses live together in Kenya. No tax consequence for either?
If you have any further comment, fine. Otherwise I'll spend some time researching your citations. Thank you again for your thorough answer.