How to Fill Out Form 3520 Line 54 for Foreign Inheritance?

Line 54 of Form 3520 is for reporting foreign trust distributions. It's split into those 3 lines because you need to categorize the inheritance as either cash, fair market value (FMV) of non-cash assets, or FMV of property transferred in connection with services rendered. For your inheritance from Spain, you'll need to determine which categories your $75,000 falls into. If some was cash, put that amount on line 54a. If you received non-cash assets like investments or personal property, put their fair market value on line 54b. The property value would likely go on line 54b as well, unless it was somehow connected to services you provided, which would be unusual for an inheritance. Make sure you have documentation showing the valuation of everything, especially for the property. The IRS can be particularly interested in foreign asset transfers.

After struggling with this exact form last year, I found a solution that saved me so much stress. I uploaded all my inheritance documents to https://taxr.ai and they analyzed everything for me. The system highlighted exactly what needed to go on each line of Form 3520 and explained it in plain English. My situation was complicated with inherited property in Germany plus some investments, and I was totally lost on how to categorize everything correctly. The taxr.ai system identified which items belonged on each line of Form 3520 and even flagged a reporting issue I would have completely missed that could have triggered penalties.

I wanted to follow up after trying taxr.ai for my Korean inheritance reporting. The service was incredibly helpful! I uploaded all my Korean inheritance documents and bank statements, and it showed me exactly how to handle the currency conversion for each transfer date. What really impressed me was how it helped me distinguish between what counted as a foreign trust distribution versus a direct inheritance, which affected whether certain items belonged on Form 3520 line 54 at all. The analysis identified that part of what I received should actually be reported differently, which I never would have figured out on my own. If you're dealing with Form 3520, especially with property valuations from another country, it's definitely worth checking out.

After spending WEEKS trying to reach someone at the IRS for help with my Form 3520 questions (and getting nowhere), I finally used https://claimyr.com to get through to an actual IRS agent. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was really confused about line 54 for an inheritance from my uncle in Australia, and the regular IRS phone line kept disconnecting me after 2+ hours on hold. Claimyr got me through to a real person in about 25 minutes who confirmed exactly how to report my foreign inheritance and which supporting documentation I needed to include. The agent explained that I needed to distinguish between trust distributions and direct inheritances, which completely changed how I was approaching the form.

I need to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it as a last resort for my Form 3520 questions. Within 35 minutes, I was talking to someone in the IRS international tax department who actually understood the form! The agent walked me through line 54 in detail, explaining that I needed to categorize my inheritance from Japan based on the type of assets received, not just lump everything together. They also explained that I needed to use the exchange rate from the date of transfer for each asset, which I hadn't realized. For anyone struggling with this form, being able to actually talk to someone who knows what they're doing makes a huge difference. I spent months trying to figure this out on my own and got further in a 20-minute call than all that research combined.

Just wanted to add that I went through this last year with an inheritance from Greece. Make sure you're actually supposed to be filing Form 3520! Not all foreign inheritances require it - only those coming from foreign trusts or estates that are considered foreign trusts for US tax purposes. If you received a direct inheritance from an individual (not through a trust), you might not need to file Form 3520 at all. This is a common misconception that causes people to file unnecessarily.

One thing nobody has mentioned - the penalties for incorrect filing or late filing of Form 3520 are BRUTAL. The minimum penalty is $10,000 and can go up to 35% of the gross value of what you received!!! I learned this the hard way when I messed up on my inheritance from the UK. Double check EVERYTHING and make sure you file on time. The deadline is the same as your regular tax return including extensions. If you're even a day late, they can hit you with those penalties.

I went through this exact situation with a similar inheritance from my grandmother in France. The key thing that helped me was understanding that you need to determine the fair market value of ALL assets as of the date you actually received them, not when your aunt passed away. For the $75,000 you mentioned, make sure you're using the correct valuation date - this is usually when the Spanish probate process officially transferred the assets to you, not the date of death. This can make a significant difference in the amounts you report. Also, keep in mind that you may need to file additional forms beyond just Form 3520. If any of the inherited assets generate income (like rental property or dividends), you might also need Form 3520-A or other international reporting forms. The IRS has a whole web of international forms that interconnect, and missing one can trigger penalties on others. I'd strongly recommend getting professional help if the total value is significant - the cost of a qualified international tax professional is usually much less than the potential penalties for getting it wrong.