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IRS Form 3520, FBAR and 8938

IRS Form 3520, FBAR and 8938

Old Jan 14th 2021, 7:13 pm
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Default IRS Form 3520, FBAR and 8938

Hello fellow expats,

Here's my situation. Brit (dual nationality) lived in the USA 20+ years. In 2019 Mum passed away in England, leaving me half of her estate. Some of the estate was sold in 2019 and that value was over $50k. It was paid into my UK account. Submitted an FBAR and form 3520 (foreign gifts). Didn't trigger the need for a 8938 (married, filing jointly).

In 2020 her house sold, and this triggered the need to file Form 8938. Filed FBAR for 2020. My question is, since all the assets (including the fair market value of the house) was disclosed in my 2019 tax return, since the house sold in 2020 do I need to file an additional 3520 for 2020?

Many thanks for any guidance.

Andrew
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Old Jan 14th 2021, 7:36 pm
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Default Re: IRS Form 3520, FBAR and 8938

I don't think you need to file Form 3520 for tax year 2020, if the total value of the estate was declared on the one you submitted for tax year 2019.

You will have to pay Capital Gains Tax on the sale of the home. The tax would be based upon your share of any gains from the fair market value of the house from the date your Mum passed away, and the price you sold at. If the estate held it for less than one year then the tax will be at short term CGT rates, if more than one year then at long term CGT rates, 15%. Plus state tax. If you do not already have it, you could estimate the fair market value of the property on the day your Mum passed by looking at the change in average house prices for that area and adjusting accordingly. The IRS will accept a reasonable rational if you have no hard data.

Sounds like you are well on top of all the other forms required.
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Old Jan 14th 2021, 8:54 pm
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Default Re: IRS Form 3520, FBAR and 8938

Thanks for the quick answer GG
The house actually sold for less than its valuation at the time of Mum's passing due to it needing quite a bit of work that hadn't been discovered at that time.
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Old Jan 16th 2021, 9:20 am
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Default Re: IRS Form 3520, FBAR and 8938

For the 8938 - until the assets are distributed to you - the foreign estate is a separate specified foreign financial asset. This is in addition to whatever cash or other financial assets were distributed to you from the estate. It is unclear if you sold the house or - alternatively - the house was sold by the estate. If you sold the house, the sale would be reported on Schedule D.
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Old Jan 16th 2021, 11:07 am
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Default Re: IRS Form 3520, FBAR and 8938

Cook County, thanks for the reply. The house was sold by the estate. Originally valued at 400k (pounds) it sold for 360k.

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Old Jan 16th 2021, 11:26 am
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Default Re: IRS Form 3520, FBAR and 8938

Assuming the assets distributed from the estate during 2020 were over $100,000 a 3520 is required for 2020.
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Old Jan 16th 2021, 1:45 pm
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Default Re: IRS Form 3520, FBAR and 8938

Yes, thanks. 🙏
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