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Would it be correct to report a foreign cash inheritance as…

Would it be correct...

Would it be correct to report a foreign cash inheritance as an initial and final on form 3520? bequest, no trust, will require FBAR now and for some years but the 3520 is mny concern

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individual, US resident alien and citizen of Germany

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Living in US

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9/27/2017
Tax.appeal.168
Tax.appeal.168, Tax Accountant
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Hello. Thank you for choosing this Q&A service for assistance. My name is Angela. I will be assisting you.

Q1: would it be correct to report a foreign cash inheritance as an initial and final on form 3520?

A1: If the amount of the inheritance is $100,000 or more, you will need to complete a Form 3520. You only need to complete this form once for that inheritance. SEE BELOW:

Reporting Requirements
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:

  • Gifts or bequests valued at more than $100,000 from a nonresident alien individual or foreign estate (including foreign persons related to that nonresident alien individual or foreign estate);

or

  • Gifts valued at more than $15,601 for 2015 (adjusted annually for inflation) from foreign corporations or foreign partnerships (including foreign persons related to the foreign corporations or foreign partnerships).

You must aggregate gifts received from related parties. For example, if you receive $60,000 from nonresident alien A and $50,000 from nonresident alien B, and you know or have reason to know they are related, you must report the gifts because the total is more than $100,000. Report them in Part IV of Form 3520. Treat gifts from foreign trusts as trust distributions you report in Part III of Form 3520.

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. See the Instructions for Form 3520 for additional information.

REFERENCE SOURCE:

https://www.irs.gov/businesses/gifts-from-foreign-person

---------------------------

Q2: will require FBAR now and for some years but the 3520 is mny concern

A2:

Who needs to file an FBAR? Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2014 generally must file. For more on filing requirements, see Current FBAR Guidance on IRS.gov. Also see the one-hour webinar explaining the FBAR requirement.

The FBAR filing requirement is not part of filing a tax return. The FBAR Form 114 is filed separately and directly with FinCEN.

REFERENCE SOURCE:

https://www.irs.gov/newsroom/taxpayers-with-foreign-assets-may-have-fbar-and-fatca-filing-requirements-in-june

If the information provided above clarifies matters for you, I ask that you be so kind as to scroll to the top of the page and select 3 or more stars to positively rate my response so that I can receive credit for assisting you. A 5 star rating is greatly appreciated. Thank you in advance.

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Customer reply replied 10 months ago
thank you, ***** ***** began recieving foreign pension in Oct. of the same year as inheritance, deposited into foreign checking account. taxable as ssa beneift but max and ending balance is
$1,100.00, inheritance +100k, is just the 3520 required? (vs. 8938) if reported on 8938 as specified asset reported on 3520, it's not necessary to report again on 8938, other than part IV, remove the inhertianced balance and pension balance is below 8938 threshold!? FBAR required, no doubt.
(sorry if shouldn't of asked here)

Thank you for the positive rating. I do appreciate it. This 2nd inquiry should have been asked under a different thread, but I will address it.

I will take a look at the Form 8938 and get back with you shortly.

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Customer reply replied 10 months ago
sorry about that, you'll rate a 5 for sure!! :-)

YOU:

if reported on 8938 as specified asset reported on 3520, it's not necessary to report again on 8938, other than part IV, remove the inhertianced balance and pension balance is below 8938 threshold!?

ME:

This is correct, not necessary to report the inheritance amount again on the Form 8938. SEE BELOW:

Reporting specified foreign financial assets on other forms filed with the IRS.

If you are required to file a Form 8938 and you have a specified foreign financial asset reported on Form 3520, Form 3520-A, Form 5471, Form 8621, Form 8865, or Form 8891, you do not need to report the asset on Form 8938. However, you must identify on Part IV of your Form 8938 which and how many of these form(s) report the specified foreign financial assets.

Even if a specified foreign financial asset is reported on a form listed above, you must still include the value of the asset in determining whether the aggregate value of your specified foreign financial assets is more than the reporting threshold that applies to you.

REFERENCE SOURCE:

https://www.irs.gov/businesses/corporations/do-i-need-to-file-form-8938-statement-of-specified-foreign-financial-assets

FBAR is required is at any time during the year the bank account had an aggregate balance of $10,000 or more or you have other foreign financial asset accounts. SEE BELOW:

Who Must File an FBAR

United States persons are required to file an FBAR if:

  1. the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
  2. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported.
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