| greglepore |
08-20-2012 04:44 AM |
Quote:
Originally Posted by jwasbury
(Post 6921681)
US citizens are required to report and pay tax on worldwide income, so leaving assets offshore does not mean you don't pay US tax. However, Receipt of gifts or inheritance is not taxable income under US tax law. US Estate and gift taxes (if applicable) are borne by the grantor rather than the grantee. Presumably if the decedent was a French citizen and resident, then the French estate/gift tax regime will apply.
The exact nature of the assets in the estate will determine what course of action should be taken after the estate process is concluded. The US-France tax treaty specifically covers things like owning real estate and business interests...situations where there is a tangible presence in the country of non-residence. Generally when there are income producing tangible assets in the non resident country, there will be an ongoing requirement to file a return and pay tax in the non resident jurisdiction. There may be no such requirement if the assets in the non resident country are only bank/cash accounts. The treaty will also contain provisions to mitigate double taxation.
Bottom line is this stuff can get complicated. Have your friend seek professional counsel. Sounds like she can afford it.
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Exactly correct. There is no US "INHERITANCE" tax - there is an "ESTATE" tax, payable by the estate, but only applicable to US decedents (this is the tax to which the exclusion discussed above applies). Therefore, what she inherits is not a taxable, or even reportable, event.
However, once the assets transfer to her, anything they generate is taxable income, and as stated above, ownership/tax issues regarding overseas assets can be complicated.
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