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About Keaukaha

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  • Location North America
  • Nationality USA
  1. Rental income calculation

    No problem, Jebra, and I really apreciate the feedback. I was just wondering if your sister was able to take advantage of the famous "step-up-in-value" that is discussed so much in the news nowadays.    Let me restate, in the hope that someone else knowledgeable about the US side of things might have a beginning of an answer? @straightpoop, would you possibly know?    Under German law, the heirs form an Erbengemeinschaft until the assets are distributed to them. Under US law, the assets left by the decedent form an estate, which is a separate legal/tax entity. When do the heirs have to indicate their inheritance in the US (by filling in  Form 3520)? Immediately, or when they actually receive assets? Under German law, being part of an Erbengemeinschaft means having received assets and being subject to Erbschaftsteuer and income tax (Feststellungserklärung). Under US law, heirs are not considered to have received a bequest or gift until assets are distributed from the estate. What about income from the assets (dividends/rent) generated after the death of the bequeather if that income is not yet distributed to the heirs? At what point does it have to be reported on their income tax?  
  2. Rental income calculation

    Thanks, Jeba, this would seem to be the most logical way.   Does she also depreciate the rental objects on Schedule E, or is that only possible after the objects have been distributed from Erbengemeinschaft ("community of co-heirs")? I am wondering how the basis value would be established. Maybe it is taken from the Festsetzungsbescheid somehow?
  3. Rental income calculation

    Guten Tag, Everyone,   I am looking for some expert advice regarding the taxation of German "Erbengemeinschaft" property rental income for a US citizen. The scenario is here:   Older relative passed away in Germany December 2019. Inheritance was decided by German estate court in April 2020: 2 heirs, younger brother (Germany) and older brother (US citizen), in a German "Erbengemeinschaft" (community of co-heirs) of 50% each until we can divide Several rental objects in different German cities, comprised of apartments/garages/houses German inheritance tax and "Erbengemeinschaft" income tax in Germany are already being handled, so my question is about the US side of things   Questions How is income and estate taxation handled between US and Germany? In Germany, income from all of the rentals is aggregated into one total sum number for the "Erbengemeinschaft" and reported onto one Form "V". We brothers don't get to claim rental income per object, but each of us then has to claim 50% of that total number on our German income tax.   In the US for worldwide income would we need to "mirror" this by claiming 50% of rental income for each rental object and filing Schedule E's for each object, then depreciate? Or, can Erbengemeinschaft income in the US also be handled like it is in Germany, more like a US probate estate or trust, where individual objects are not reported until the estate is actually settled and assets are distributed among the beneficiaries?   If depreciation, then there are several rental objects, how to partition them for depreciation, given that about half of them will go to the other brother once the Erbengemeinschaft is distributed and also several will have to be sold to pay for inheritance taxes?   There are so many knowledgeable folks here and I'm hoping that someone will know something about this area that's giving me sleepless nights recently :-)   Thanks, Stephen