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My wife received an inheritance in Brazil. When we transfer

these funds to the USA...
My wife received an inheritance in Brazil. When we transfer these funds to the USA what documents will The IRS require to prove the money is from Inheritance, the total quantity will be about US$ 150,000 in total.
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Answered in 1 minute by:
5/1/2013
Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,869
Experience: 15years with H & R Block. Divisional leader, Instructor
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Robin D :

Hello and thank you for using Just Answer,
The form 3520 would be used to report the inherited money. If the amount is $100,000 or more the Form 3520 is used to report only, it is not taxable.

Robin D :

File Form 3520 separately from your income tax return. The due date for filing Form 3520 is the same as the due date for filing your annual income tax return, including extensions. You file an annual Form 3520 for all reportable foreign gifts and bequests you receive during the taxable year.

Robin D :

Mail Form 3520 to the following address:
Internal Revenue Service Center
P.O. Box 409101
Ogden, Utah 84409

Customer:

Will the IRS REQUIRE ANY DOCUMENTS TO VERIFY THE FUNDS ON FORM 3520

Robin D :

Not with the 3520, she would want to retain any documents from the inheritance for future if asked.

Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15,869
Experience: 15years with H & R Block. Divisional leader, Instructor
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Robin D. and 87 other Tax Specialists are ready to help you
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Customer reply replied 4 years ago

 


We plan to transfer the money from Brazil to our account here at PNC with a friend: We give him Reais in Brazil and he transfers US$ from his account here in the USA to our account at PNC.


 


Would this cause a problem with the IRS here when we report on Form 3520?


 


The official method would be to transfer the funds through the Central Bank of Brazil to the Federal Reserve and to our Bank. This process could take several months in Brazil so we would like to use the first method.

The preferred process would not change the reporting. Your account in Brazil is subject to the FBAR and FATCA reporting based on the amount you have in the account, so not forget about that. Basically if you have $10,000 or more in the account you will need to look to FBAR (form 90-22.1) to report the account. This is in addition to reporting the inherited amount on 3520.
I hope you were able to view the answer to the other question about rental you asked me about.
http://www.justanswer.com/tax/7qi7b-next-year-will-receive-us-18-000-rental-income.html

I did not hear back from you on that one.
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Customer reply replied 4 years ago

We do not have an account in Brazil. The Inheritance is from selling of a series of Apartments. Currently we are concerned about transferring


US$ 50,000 without going through the Official channels, i.e. Brazil's Central Bank. The question: Would the transfer method have any affect on the reporting here in the US?

No, the method of transfer will not matter as to your requirement to report.
If you inherited the property then sold it you will need to report the sale on your US tax return. You would most likely not have Capital Gains tax to pay but there is a big difference (for reporting) when one inherits cash or they inherit property (title changed to their name) and then sale.
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Customer reply replied 4 years ago

the property was sold by the Estate and we received the Cash from the estate, no property, no bank accounts.


The question is: Would the method of transferring the funds from Brazil to the USA create a problem with the IRS when we report the Inhertance on form 3520?


 


 

No, the method would not be a problem. You would still report the inheritance on form 3520 even if you use a friend for transfer.
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Robin D.
Robin D.
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