Technical topics regarding tax preparation.
31-May-2023 10:13am
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TP has a house in a foreign country which he plans to sell. His parents gifted him money to buy the house when he got married.
The house is under his name.
Does the fact that his parents gave him money to buy the house make any difference when calculating his capital gain from the sale of the house? In other words, will his tax liability be lower than if he used his own funds to buy the house?
31-May-2023 11:03am
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31-May-2023 12:37pm
Big E
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What his parents gifted him to purchase the house, has no bearing on his cost basis.
(Hopefully the parents filed a gift tax return for the year gift was made - splitting the gift - to maximize the exemption exclusion for the year.
31-May-2023 12:58pm
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1-Jun-2023 1:07am
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Which country? What is the client's US visas status? Are the parents US persons?
PS – Greeting from London, England. Grey and rainy ...
1-Jun-2023 4:53am
Big E
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cp_acwt wrote:https://www.irs.gov/faqs/capital-gains-losses-and-sale-of-home/property-basis-sale-of-home-etc/property-basis-sale-of-home-etc
The original post stated that the parents gave the money to the son to buy the house.
It didn't state that the parents gifted the FMV of the property to the son.
So the link provided is not relevant to the facts.
1-Jun-2023 8:03am
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Thank you all for the info.!
TP is US citizen but his parents are China citizens
1-Jun-2023 11:55am
Big E
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I suggest you read the information on the following link:
https://www.irs.gov/site-index-search?s ... storical=1Foreign gift reporting to a U S citizen - Form 3520
2-Jun-2023 1:41am
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The client may have needed to have filed Form 3520 when the gift was received. Possible FBAR & Form 8938 requirements. If these were required but not filed, possibly the SDOP to catch up. Alternatively, possibly the DIIRSP (which inevitably will take years of negotiation with IRS Appeals).
PS – Greeting from London, England. Grey and rainy ...
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