Taxable Talk

The IRS posted a revised draft of Form 8938, the “Son of FBAR.” I’d normally note the highlights; however, in this case let’s look at the lowlights:

First, the form is far more extensive than the original draft. Let’s assume you have to report a foreign bank account. You will need to report the same information that’s on the FBAR (Form TD F 90-22.1) plus the conversion rate (to US Dollars), what conversion rate you used (e.g. CIA World Fact Book), and the foreign currency the account is maintained in. You also have to note if you opened or closed the account during the year.

For non-bank accounts (investments, and other items), you will have to report the above along with information about the asset. For example, you will have to note the kind of entity it is (e.g. corporation). If the entity is not a stock, you have to list out all the issuers/counterparties of the entity.

But there’s more! (Unlike infomercials, this is not a good thing.) In Part III of the form you have to note the income from each asset and then note where it is being reported on your tax return. If you have nontaxable distributions from a foreign asset, you must note these, too.

Finally, the brief ray of sunshine exists for files of Forms 3520, 3520-A, 5470, 8621, or 8865. Those individuals do need to file Form 8938 but just get to note in Part IV of Form 8938 that they’ve filed the other form and the number of those forms filed.

As best as I can tell, this form will apply for all foreign assets, and all money maintained outside of the United States. This will include online gambling accounts, so for those who no longer have to file the FBAR, you may have to file the Son of FBAR. Note that the Son of FBAR only applies if you have $50,000 or more in one or more such accounts. And given that Congress likes to use shotguns to go after jaywalkers, there are new fines and penalties associated with this form.

Remember, this is just a draft of the form, so it is subject to change. Additionally, this is a requirement for filing for 2011 (due in 2012), not your 2010 returns (due in 2011). Still, it would be nice if we saw some simplification rather than bringing out the Son of FBAR and the like.

Tags: FBAR

This entry was posted on Wednesday, June 15th, 2011 at 2:52 pm and is filed under IRS. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.