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Foreign gift real estate from parents. How do I report?

Forum|Forum|5 years ago
February 14, 2021
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Hello, can anyone help me answer how I should report my situation?

1. Real Estate: So I became a US green card holder in 2020. I have parents in foreign country (they are non-resident aliens), and they bought real estate property some years ago under me and my sister's name as an intend to gift us later. Last year before I became a card holder, they sold the property and had half the money which is $350k from the sale deposited into my foreign account. They paid all the taxes associated with gifting the real estate under my name, as well as the sales taxes that incurred in the foreign country.

When reporting this to the IRS, do I report that I was gifted the property, and then need to report the sales as income?? Even though I did not put any money into the property in the first place? Or can I just report the $350k in my bank as gift on form 3520?

2. Brokerage Account: They also opened a brokerage account under my name and bought stock on the account some years ago. I believe the value of the account right now is about $150k. Do I need to also report this as gift? Or simply as FBAR?

I really appreciate all your help!! I've been trying to sort this out but getting more confused... Thanks in advance!

Best answer by JeffreyR77

You have a requirement to report any foreign account with a balance greater than $10,000 in the year (FBAR).

The origin of the funds in savings prior to becoming a resident alien is not material.

Your basis in the foreign stock is $0 as it was gifted.

You also have a requirement to report any earnings on the foreign accounts and investments on your tax return.

If you are subject to foreign income taxes on earnings on your foreign accounts you can claim a credit for foreign taxes paid on Form 1116.

J

JeffreyR77Answer

You have a requirement to report any foreign account with a balance greater than $10,000 in the year (FBAR).

The origin of the funds in savings prior to becoming a resident alien is not material.

Your basis in the foreign stock is $0 as it was gifted.

You also have a requirement to report any earnings on the foreign accounts and investments on your tax return.

If you are subject to foreign income taxes on earnings on your foreign accounts you can claim a credit for foreign taxes paid on Form 1116.

E

ehjinAuthor

Thank you so much for your reply!
So if I understood correctly, since the gifts were before me obtaining permanent resident status, i dont need to worry about form 3520, and just need to focus on FBAR and reporting interest income etc from existing foreign accounts?

I also forgot to add I have been living in US for several years (high school through grad school) and so was I supposed to report my foreign accounts during this time although no income?? I heard I would need to submit separate streamlined report if thats the case..