[lisboa2009]

Hello,

Filling my taxes this year what is my liability as for US taxes?
My situation is my mother a Portuguese citizen passed away in 1988, she did have a green card in the US- my mother owned an undeveloped peace of land in Portugal she built a house/ my parents had a pre-mutual agreement in the laws of Portugal my father and I became the inherit ants of this property. After many years we had to get POA's to helps us place the inheritance in our names finally claim it, it got done last year in February of 2008, my father and I sold it in August of 2008. We split it in half we each received 47,000 US dollars, we had it wired transferred to our US banks we are both US citizens. What is my exposure/liability with this dollar amount? How much should I expect to pay uncle Sam?

The land was purchased in escudos everything has been converted into Euros now, but back then the property was appraised for Fair market value was about 68,000 us dollars
we got 94,000 dollars in total and slip it in half... we also had to pay for taxes to legalize the undeveloped peace of property before claiming part of why it took so long to get this in our names. The total amount of property taxes and all government fees is about 12,247 Euros paid.

In the end I just want to know how much to I need to pay uncle Sam this year and my father is on social security the only income he has.. will the liability be the same for me and dad or will it be different?

I thank you in advance for your advice, knowledge in answering my question.

Regards,

Lisboa2009

[MukatA]

There is no federal tax on inheritances. Most of the states do not tax inheritances. For your state, check at the state web site.

If you are getting money as gift or inheritance from a foreign country, you may be required to file Form 3520. Read: Your U.S. Tax Return: Tax on Inheritances

[AtlantaTaxExpert]

Lisboa:

While MukatA is correct that you pay no taxes on the inheritaed value of the property, you DO pay capital gains tax on the appreciation the property had since her death. This is reported on the Schedule D.

For your tax return, on the Schedule D, your sales proceeds is $47,000. The original basis is $34,000 PLUS 6,123.5 Euros (half of the costs associated with the property transfer).

The Euro exchange rate has been fluctuating pretty much lately, but you can use a historic exchange rate website to determine what the exact dollar equivalent will be. My educated guess is about $8,000.

So your basis is $34,000 plus $8,000, or about $42,000.

That put's your capital gain at around $5,000.

YOU probably will pay 15% of that, or $750, in caital gains tax.

Your dad, being on Social Security, will pay either ZERO or, at most, 5% ($250).