[Yanka]

My wife, a German citizen with a green card, recently passed away in September. She left a
House and some money assets in Germany. What are the tax consequences of liquidating the
Property and money assets and wire transfer proceeds to US.

[AtlantaTaxExpert]

There are no taxes to transfer the money, at least on the U.S. side of the transfer. Form 3520 MAY have to be filed to report the sourcing of the funds, depending on the amount transferred.

Your wife was considered to be a U.S. resident, so she left an estate which must have an executor (presumably you). Unless the estate is sizable, there are probably no estate taxes, and the federal government levies NO inheritance taxes. No sure what Germany has in the form of taxes.

For estate tax purposes, the basis of the German property is "stepped up" to the Fair Market Value of the property on the date of her death, so it is likely that the property can be sold with little or no capital gains taxes, though if the property is sold by the estate, the sale will probably have to be reported on a fiduciary return (Form 1041).

Recommend you find a local tax professional with both income and estate tax experience (an enrolled agent offers the best value in my opinion) and discuss these issues in detail. Do this soon (in December), because next month, EVERY tax professional becomes VERY busy.

[IntlTax]

Where did your wife live when she died? The U.S. or Germany? Are you a U.S. citizen or a green card holder? Did your wife pay U.S. income taxes on the earnings generated in Germany? Did she file FBARs to report her financial assets in Germany?

Form 3520 is not required. It is required if there is a gift or inheritance from a nonresident alien to a U.S. citizen or resident and the amount exceeds $100,000. Since your wife was a U.S. resident alien for income tax purposes, Form 3520 is not relevant.

If your wife was living in Germany when she died she very well may not be a resident for U.S. estate tax purposes. (despite all the protests and jumping up and down you will hear otherwise from U.S. tax advisors that don't understand that there is a difference between residency for income tax purposes and residency for estate tax purposes).

[Yanka]

Thank you for the information. Some additional information:

My wife died in USA and lived in the USA (Green card). I am a US citizen. We have done our own tax returns and I was aware of a checking account in Germany. Since the account was usually less than $10,000 I did not disclose the foreign account. Since her death and going through her documents, I became aware of some CDs she held in the same German bank that total more than $10,000. Now I am at a lost. Should I disclose the accounts, claim any interest on the CDs and voluntarily submit a FBAR for the current tax year. Any Advise.

[AtlantaTaxExpert]

Yes, submit the FBAR for all years that exceeded $10,000. Include a cover letter explaining the situation, and request that all penalties be waived. The waiver will probably be granted.

Your wife's estate is U.S.-based, but it likely will owe NO estate taxes.