Tax on income earned on inheritance held in probate?

What are the US tax consequences for a US citizen who receives a foreign inheritance? Say the foreign estate goes into probate and after all the assets are sold and the bills and foreign taxes are paid by the estate the estate's value is $150k. Then that this money sits in a foreign account for a few weeks and earns $1000 in interest. Eventually the account comes out of probate and the executor pays the US citizen the $151k in the account.

Obviously form 3520 has to be filed, but does the $1000 have to be included as foreign interest income on the 1040 or is it just classified as inherited money?

If the money is directly wired from the probate account to an account in the US does the beneficiary have to file FBAR or 8938 forms?

I would think the $151K would be reported on 3520 part 4, as this is the amount received from probate. The $1k is not your passive income, rather it's earned from the lawyers client account.

I would say no on the FBAR and 8938 as the beneficiary received the monies directly from the lawyer to U.S. based account.

$1,000 of passive estate income, appropriately noted on Schedules B and E.

8938 according to the IRS and arguably the statute.

FBAR probably.

$1,000 of passive estate income, appropriately noted on Schedules B and E.

8938 according to the IRS and arguably the statute.

FBAR probably.

If the executor sends an R185 I assume you can take a foreign tax credit for any UK tax the estate paid on the interest.

So without the $1000 of declared interest income, is only a 3520 required? No schedule B, Schedule E, 8938 or FBAR?.......on second thoughts if you file the 3520 you've reported the inheritance on your tax form so do you then have to file an 8938 and just fill out Part IV to tell the IRS the info is on 3520?

This points out the "Alice in Wonderland" flavour of US taxation.......you need to file a form to inform the IRS that you've filed a form!!!!!

$1,000 of passive estate income, appropriately noted on Schedules B and E.

8938 according to the IRS and arguably the statute.

FBAR probably.

Why FBAR? The US citizen has no signature authority over any of the foreign accounts while they are in probate.

Also why the 8938? It it because the inheritance and any gains earned while in probate, are reportable on a US tax return. So if there were no gains in probate and the inheritance was $51k there would be no 8938 required even though it's above the single persons $50k FATCA reporting threshold because there's no gain to report and no 3520 required because the inheritance is less than $100k.