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tt68onio · Feb 9, 2009, 08:04 PM

Hi all,
I (US citizen residing)received a partial foreign inheritance via a US relative(my brother).
Source is proceeds from my decessed alien mother in Japan. Through her will , the house was put in my brothers name. Through 2 years of setting up POA's and a lawyer to have the house's deed transferred to my brother, myself and father(all US citizens , residing in the US), we finally found a cash buyer through a realestate agent via our Japanese uncle. After sale taxes and deed transfer, the monies were wired to my brothers bank. I am not sure if the realestate agent wired it from their account or from my uncles account .Subsiquently , my brother sent my father and I our 3rd portion via a personal check.

We know that my brother needs to file a 3520 since the lump sum was over $100,000.

My question: how would we treat my father s & my portion (+ $20,000)?
Wouldn't my brother need to treat it as a gift ?

Please advise.

tt68onio · Feb 10, 2009, 11:41 AM

Bump

Five Rings · Feb 10, 2009, 12:59 PM

Was the bequest of the house to your brother only or to the three of you?

tt68onio · Feb 10, 2009, 01:37 PM

The bequest was in all 3 of us.

Five Rings · Feb 10, 2009, 01:41 PM

Bequests are not taxable. Your brother was acting as a mere conduit to pay you and your father your portion of the bequest and his paying the money to you is not a gift.

tt68onio · Feb 10, 2009, 01:52 PM

Originally Posted by Five Rings

Bequests are not taxable. Your brother was acting as a mere conduit to pay you and your father your portion of the bequest and his paying the money to you is not a gift.

Understood. However, wouldn't IRS still need a 3520 from my brother? Would it help to stipulate in a form of a letter perhaps, that the total amount was split in 3?

Anything additional required by my father and myself?

Five Rings · Feb 10, 2009, 02:27 PM

Was Mother a US citzen or green card holder?

tt68onio · Feb 10, 2009, 02:45 PM

No

Five Rings · Feb 11, 2009, 02:25 AM

It appears to me in looking at Form 3520 that your brother does not have much work to do. Only part IV is relevant to your situation since:
a) Mother was a nonresident alien and not an expatriate under sec 877 of the IRS code.
b) No foreign trusts, corporations or partnerships were involved.

Writing a note to attach to the Form is never a bad idea if there might be some confusion. Your brother could say:
Mother's name, a citizen and resident of Japan died on (date of death). She was neither a citizen nor resident of the United States.
She bequethed a house in Japan to myself, father, and brother whose FMV when sold was W. The distribution to me was X, to my father Y, and to my brother Z.

Nothing is required of you or Father

tt68onio · Feb 11, 2009, 04:17 PM

Five rings, thank you for your time. I am in agreement on this.

Funny thing is my brother asked his CPA , CPA says no need for 3520 since its not a trust?? And the intended split of monies is under $100, 000.

I'd like to see what kind of income that CPA has :eek:

Five Rings · Feb 12, 2009, 03:01 AM

I had assumed from the original post that brother number 1 had received over $100,000 and brother number 2 and father had each received $20,000+.
I thought property in Japan was somewhat pricey. If nobody got the benchmark bequest of $100,000 then the CPA is probably correct.

Nevertheless, since it will only take a minute or two to do the 3520 why not err on the side of caution and cover all the bases?