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About John Stancil, CPA
Expertise
I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants. Visit my website at www.johnstancilcpa.com. Also visit my blog, www.thetaxdocspot.com.

Experience
I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper. I have prepared taxes for over 30 years.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill College

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Tax Law (Questions About Taxes) - Sale of inherited foreign property

Expert: John Stancil, CPA - 11/8/2009

Question
My father-in-law passed away in Taiwan 28 years ago and left the family house to my wife and her 5 brothers. Her eldest brother lived in that house free ever since. In April this year the house was sold, 1/6 of the proceeds abt US$80,000,after paid Taiwan government property appreciation tax abt US$15,000, was e-transferred to my wife bank account here. My questions are:

1. Can I treat the whole US$80,000 as inheritance (gift and bequest)and report in Form 3520 without paying any US tax?

2. Should I report the property appreciation abt US#50,000 as income and claim US$15,000 as foreign tax credit? USA has been maintaining very closed unofficial relationship with Taiwan government, but has no formal diplomatic recognization. Does IRS accept the credit?

Answer
Hou,

Thanks for your question.

No you cannot treat the entire amount as an inheritance and avoid taxation. You must report the sale, calculating your gain as the difference in the basis (FMV at the date of his death) and the proceeds from the sale.

If the Taiwanese tax was an income tax, you can get a U.S. credit for the tax paid.

Hope this helps.

John Stancil, CPA

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