Receipt of Foreign Gifts and Bequests
Receipts of foreign gifts and bequests by U.S. residents carry with them the potential for both IRS disclosures obligations as well as potential U.S. tax obligations.
When a U.S. person receives a gift or bequest from a non-U.S. person or estate in excess of various threshold amounts, the recipient must disclose the transaction to the IRS on an informational form.
Once the disclosure issues have been addressed, the transaction must be reviewed to determine if there are any U.S. tax considerations. Generally speaking, a carefully structured gift or bequest often can pass to a U.S. recipient free of any U.S. tax. However, even a minor deviation from the precisely developed U.S. rules can result in a U.S. tax liability.
My experience in this area extends over many years of working with multiple generations within an international family to comply with the informational forms and at the same time stay outside the rules requiring a tax payment.