Legal Question in Tax Law in California

Re: Inheritance of a foreign business

you should consult a qualified tax attorney or the cpa or enrolled agent who will prepare the final income tax returns for your father (the period during 2004 before he died), the estate income tax return for the period during 2004 after he died, the estate income tax return for the period during 2005 before the partnership share was tranferred to you (presumably in accordance with your father's will and after probate or in accordance with your father's trust), and for 2005 after you received the partnership share. it is possible that the estate may elect a fiscal year and only need to file one set of income tax returns.

your questions cannot be answered completely and correctly without review of documents and additional information. for example, although you refer to the foreign partnership, the form you mention, Form 5471 is for shareholders in foreign corporations. another form, Form 8865 may be applicable to your situation. finally, the irs rules for classification of an entity may result in a partnership being taxed as a corporation in some instances. and you may be eligible for a foreign tax credit for any tax which you pay in the country in which the partnership operates.

it is also assumed that you have already received advice regarding us estate tax and that the estate will be filing a us estate tax return (and perhaps an equivalent form in the foreign country).