Situation: Parents are helping daughter and son-in-law purchase a home. Parents live in Korea, mom is a US Citizen, father is a Korean Citizen and has never been a US Citizen.

Parents are gifting $400,000 from their joint account in Korea.

Daughter and son-in-law want to know the tax impact, if any. Specifically should this entire transaction be reported as a Gift on Form 709, or should it be reported as a Foreign Gift on Form 3520?

I guess the real question is: Is the fact that the mom is a US Citizen make the entire gift from a US source or not?

Secondary question: Is there any opportunity to split the gift between Form 709 and Form 3520 in order to reduce future tax liability when the parents exceed the $1M Lifetime Exclusion?

Thanks in advance for your help!

1. If your parents file joint return as residents, the gift by any one of them is taxable. File gift tax returns for both the parents.

2. If father does not file U.S. tax return as resident, the gift by him is not taxable. File Form 3520. Your U.S. Tax Return: The U.S. Gift Tax