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My grandfather is advancing in years and has moved in to an senior citizen's home. He has decided to sell his former home and distribute the proceeds between his descendants. He is a resident and citizen of the UK.

I am fortunate enough to be one of the recipients of said proceeds. However I am a UK citizen resident in the US and paying taxes there (on a visa, technically I am a non-resident alien but I have been here for a number of years and plan to stay). I am interested to know what the tax implications of this transfer will be.

Will he or I be liable for any taxes in either country?

How would I list this on my US tax return?

Would the answers be different if the worst should happen and he passes on before or shortly after the transfer?

Note: What are the US gift tax rules for gifts from non-US persons? is a potential dupe, but the answer is a guess and doesn't address the more specific questions I have.

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Will he or I be liable for any taxes in either country?

If your grandfather is not a US citizen or green card holder, then his gift to you is not taxable by the US in any way. I'm not familiar with the UK laws, I'll leave that part of the question to someone else to answer.

How would I list this on my US tax return?

If the value is $100K or more - using form 3520. Talk to a tax professional.

Would the answers be different if the worst should happen and he passes on before or shortly after the transfer?

If they have an estate tax in the UK - it might cover this gift as well as part of the estate, but as I said - I'm not familiar with the UK laws on the matter well enough to answer.

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    (Deleted previous comment from not having read the question properly). There is an inheritance tax in the UK (with a relatively high threshold, so it may not be relevant anyway). There is taper relief on any gifts made in the 7 years before the person died.
    – Vicky
    Apr 8 '14 at 9:39
  • Even if the grandfather was a US citizen or green card holder the gift or bequest is still not taxable by the US in any way. When there are tax consequences of a gift, the consequences fall on the giver, not the recipient.
    – QuantumMechanic
    Apr 10 '14 at 0:36
  • @QuantumMechanic true. I was making a point that it wouldn't be taxable in any way. If the grandfather is a US person then form 3520 is not required, I assumed he's not.
    – littleadv
    Apr 10 '14 at 0:38

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