foreign inheritance

[jseber1982]

What is the name of your state (only U.S. law)? Just moved to GA from VA

My uncle died approx 10 years ago and my parents said that he left me some money over in switzerland. I was only 16 at the time, i didnt pay much attention to it. I am 26 now. He was a US citizen living in the US. All of the money that our family has, has been passed down generation to generation staying in swiss accounts from WW1. I just went over this year to do some paperwork on it, turns out i have $300,000 in stocks in swiss banks. My parents have been bringing me money back each year for the past 3 years.. like 30k a year, so i have sorta known about it, but i did not know any details or how much i had until now. And of course they have never paid 1 cent of taxes on any of it, none of my family. Also it turns out that our family had a secrecy clause in it that has all paperwork destroyed. So i wont have any record on how much the stock was purchased for to calculate capital gain.I want to somehow wire transfer it over or something like that, the legal way. The bankers over there were making me feel guilty saying that once i tell the irs, the irs will go after my entire family pretty much. If i have to pay back taxes on it, i dont care, even if i loose over 60% of it....it is now just a burden on my wife and I's relationship and i dont want to get in trouble with the irs and mess my life up. Of all the money that they brough back for me, only like 25k of it made it into the bank, so i am assuming that i should be smart and file back taxes on that

I am just worried that i have gotten so deep into it that there is no way out that wont put me in the hole.

And now the irs is getting into the ubs bank, which is where it is... So the money was dropped on me when i was too young to care, and now i need to hurry up and do something about it before the irs finds out and accuses me.... even though i have plans to do it the legal way

Any advice you have would be greatly appreciated.Thanks,

 

[seniorjudge]

You need to hire a very good tax attorney.

Yesterday.

 

[jseber1982]

So pretty much this could destroy my life even though i had no hand in receiving it, that sux..wish my family hadnt been so stupid

 

[Zigner]

So pretty much this could destroy my life even though i had no hand in receiving it, that sux..wish my family hadnt been so stupid

How did you get THAT out of the advice to seek counsel with an attorney?
If YOU do things right, this may not be a major problem for you.

 

[seniorjudge]

I said:

You need to hire a very good tax attorney.

Yesterday.

You said:

So pretty much this could destroy my life even though i had no hand in receiving it, that sux..wish my family hadnt been so stupid

My response: HUH?

 

[jseber1982]

Sorry bout that. This is the first time i have ever had to even talk to a lawyer.. so i am just sort of jumpy and scared. Have wife, 2 kids and another child in 2 months. just stressed out. We are all worried that i might have to go to jail or something since i wont really have much paperwork to show from the bank....sorry just inexperience with any of this


So getting a good lawyer more or less just means that it is complicated.... not necessarily bad

 

[Farfalla]

Since you inhereted the money, the tax burden might only be on the interest that has been earned from the time of inheretance.

A good tax attorney will know how to present your case to the IRS so that you are not hit to hard.

Just found this article....
http://www.usatoday.com/money/perfi/taxes/2008-06-30-irs-swiss-bank-ubs_N.htm

Here's a bit more about the taxes that Swiss banks already pay.....
http://money.howstuffworks.com/swiss-bank-account3.htm

 

[LdiJ]

While I agree that a consult with a tax attorney would be wise, the situation is not nearly as "dire" as its coming across.

You got a stepped up basis in the stock when you inherited it. No capital gains or losses are to be calculated until the stock is actually sold. Therefore it should be fairly easy to find the historical stock basis as of the date you inherited the money.

If its stock, then there has been no "interest" to report since you inherited it. There may however, have been dividends, but those dividends may not have been taxable in the year that they were issued, depending on how the fund was handled, they may simply add to your gain now.

As far as the 30k per year that your parents have been "bringing" you for the last three years, that's not even that big of a deal. Again, if that money is coming from stock sales, then it would be fairly easy to amend your returns, again by finding out the FMV of the stock at the time you inherited it, and amending your returns to report the sale and any capital gain or loss.

Also, is there any chance that the stocks were in a trust to which you have just gained control?...like on your 25th birthday? If so, then any dividends issued since you inherited are probably not taxable income to you anyway....and perhaps not the 30k for the last three years either. Any taxable income would have been to the trust, and the US can't tax a foreign entity, and the trust would have been a foreign entity.

So, please don't panic over this. You aren't going to owe nearly as much tax as you think, and you certainly aren't going to jail.

If it was a trust, and you are just now getting control of the money, then research the historical value of the stock to determine your basis, and report the entire 300k this year, and pay your tax on whatever capital gain that you have.

If it was not a trust (and it really sounds like it was/is) then go get a consult with a tax attorney. I would recommend interviewing several of them.

DO NOT go to a firm like JK Harris.

 

[jseber1982]

thanks for the replies.

Yes we use UBS bank hehe. well, did. While my dad and I were over there, he switched everything to a different bank. That was just why i was so stressed out.. just found out that i had it,, and then bam i have to do something or the irs will find out from ubs. I was hoping to let it sit there for a few months while i figure things out





So i should go to a real tax attorney instead of a JK one? Do they try to screw you over or something?

Was talking to a few lawyers and they want like 300+ an hour... a real shocker to me, i had no clue they would cost that much

The banker over there is also our stock broker. I asked him for the details on what the stocks were purchased for... he said that the records were destroyed due to some secrecy clause assigned to the account., If the capital gain can not be calculated... does the irs have some other formula? Like a flat rat tax to assign the total amount?

 

[seniorjudge]

thanks for the replies.

Yes we use UBS bank hehe. well, did. While my dad and I were over there, he switched everything to a different bank. That was just why i was so stressed out.. just found out that i had it,, and then bam i have to do something or the irs will find out from ubs. I was hoping to let it sit there for a few months while i figure things out





So i should go to a real tax attorney instead of a JK one? Do they try to screw you over or something?

Was talking to a few lawyers and they want like 300+ an hour... a real shocker to me, i had no clue they would cost that much

The banker over there is also our stock broker. I asked him for the details on what the stocks were purchased for... he said that the records were destroyed due to some secrecy clause assigned to the account., If the capital gain can not be calculated... does the irs have some other formula? Like a flat rat tax to assign the total amount?

You need to hire a very good tax attorney.

Yesterday.

Do you want me to post it a fourth time?

 

[LdiJ]

thanks for the replies.

Yes we use UBS bank hehe. well, did. While my dad and I were over there, he switched everything to a different bank. That was just why i was so stressed out.. just found out that i had it,, and then bam i have to do something or the irs will find out from ubs. I was hoping to let it sit there for a few months while i figure things out





So i should go to a real tax attorney instead of a JK one? Do they try to screw you over or something?

Was talking to a few lawyers and they want like 300+ an hour... a real shocker to me, i had no clue they would cost that much

The banker over there is also our stock broker. I asked him for the details on what the stocks were purchased for... he said that the records were destroyed due to some secrecy clause assigned to the account., If the capital gain can not be calculated... does the irs have some other formula? Like a flat rat tax to assign the total amount?

You know what stocks are in the account, and how many shares of each there are. The information is available on the net as to what those stocks were worth on the day that you inherited the account....therefore, go look them up! Its not rocket science and there is no reason to pay a tax attorney 300.00 an hour to research information that you can find yourself. You need the tax attorney to confirm how you need to handle things, tax wise, and intervene with the IRS on your behalf, if that's even needed. You do not need the tax attorney to look up historical stock prices.

Do NOT let the stockbroker tell you that he cannot tell you what stocks are in the account, or the number of shares, because that simply is NOT true. You can't get money out of the account without selling the stocks, therefore THOSE records ARE available.

I am also not inclined to believe that information was destroyed regarding the original purchases of stock and their cost. I am inclined to believe that the stockbroker doesn't want you to know for some reason, and I am also inclined to believe that the broker doesn't want you to move the money and would therefore try to scare you into leaving it be, however I am not inclined to believe that the records are not available, unless they go clear back to WW1. If they go back that far, they may not be available. However you do not need records for that far back, you only need records for the year that you inherited the stock account.

If its impossible to establish basis, then you are going to have to pay capital gains tax on the entire 300k. That would be a flat 15%, or 45k. The same 15% would apply to the 30k that you got for the last 3 years however interest and penalties will also apply, which might add another 25% or so of the tax amount, not the total amount. (again, if this was not a trust account). However, it is NOT impossible to establish basis...because once more, you need to know the stock's value as of the day you inherited it, and that information is readiliy available out there.

You don't hire a company like JK Harris, because you will spend absurd amounts of money for things that you can either do yourself, or you can have done at a much more reasonable price.

Also, you have the money to pay the tax therefore you won't be "negotiating" with the IRS. You will simply be paying the tax.

Oh, and by the way, I am a tax professional with more than 20 years of experience. So I do know what I am talking about.

 

[Dandy Don]

You do not need a tax attorney. You need a CPA or certified tax accountant.

DANDY DON IN OKLAHOMA ([email protected])