ABA Journal Daily News - Business of Law

FindLaw News - Top Stories

WSJ - Business

NYT - Business

NYT - Americas

L.A. Times - Business

Los Angeles Business Journal

San Diego Business Journal

El Economista - Ăšltimas noticias

Reforma - Negocios

Monday, October 1, 2012

Should you file an FBAR or a Form 8938 to report your Mexican Financial Assets?


Form 8938, Statement of Specified Foreign Financial Assets
Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR)
Who Must File?
Specified individuals, which include U.S citizens, resident aliens, and certain non-resident aliens that have an interest in specified foreign financial assets and meet the reporting threshold
U.S. persons, which include U.S. citizens, resident aliens, trusts, estates, and domestic entities that have an interest in foreign financial accounts and meet the reporting threshold
Does the United States include U.S. territories?
No
Yes, resident aliens of U.S territories and U.S. territory entities are subject to FBAR reporting
Reporting Threshold (Total Value of Assets)
$50,000 on the last day of the tax year or $75,000 at any time during the tax year (higher threshold amounts apply to married individuals filing jointly and individuals living abroad)


$10,000 at any time during the calendar year
When do you have an interest in an account or asset?
If any income, gains, losses, deductions, credits, gross proceeds, or distributions from holding or disposing of the account or asset are or would be required to be reported, included, or otherwise reflected on your income tax return
Financial interest: you are the owner of record or holder of legal title; the owner of record or holder of legal title is your agent or representative; you have a sufficient interest in the entity that is the owner of record or holder of legal title.
Signature authority: you have authority to control the disposition of the assets in the account by direct communication with the financial institution maintaining the account.
See instructions for further details.
What is Reported?
Maximum value of specified foreign financial assets, which include financial accounts with foreign financial institutions and certain other foreign non-account investment assets
Maximum value of financial accounts maintained by a financial institution physically located in a foreign country
How are maximum account or asset values determined and reported?
Fair market value in U.S. dollars in accord with the Form 8938 instructions for each account and asset reported
Convert to U.S. dollars using the end of the taxable year exchange rate and report in U.S. dollars.
Use periodic account statements to determine the maximum value in the currency of the account.
Convert to U.S. dollars using the end of the calendar year exchange rate and report in U.S. dollars.
When Due?
By due date, including extension, if any, for income tax return
Received by June 30 (no extensions of time granted)
Where to File?
File with income tax return pursuant to instructions for filing the return
Mail to:
Department of the Treasury
Post Office Box 32621
Detroit, MI 48232-0621
For express mail to:
IRS Enterprise Computing Center
ATTN: CTR Operations
Mailroom, 4th Floor
985 Michigan Avenue
Detroit, MI 48226
Certain individuals may file electronically at BSA E-Filing System
Penalties
Up to $10,000 for failure to disclose and an additional $10,000 for each 30 days of non-filing after IRS notice of a failure to disclose, for a potential maximum penalty of $60,000; criminal penalties may also apply
If non-willful, up to $10,000; if willful, up to the greater of $100,000 or 50 percent of account balances; criminal penalties may also apply
Types of Foreign Assets and Whether They are Reportable
Financial (deposit and custodial) accounts held at foreign financial institutions
Yes
Yes
Financial account held at a foreign branch of a U.S. financial institution
No
Yes
Financial account held at a U.S. branch of a foreign financial institution
No
No
Foreign financial account for which you have signature authority
No, unless you otherwise have an interest in the account as described above
Yes, subject to exceptions
Foreign stock or securities held in a financial account at a foreign financial institution
The account itself is subject to reporting, but the contents of the account do not have to be separately reported
The account itself is subject to reporting, but the contents of the account do not have to be separately reported
Foreign stock or securities not held in a financial account
Yes
No
Foreign partnership interests
Yes
No
Indirect interests in foreign financial assets through an entity
No
Yes, if sufficient ownership or beneficial interest (i.e., a greater than 50 percent interest) in the entity. See instructions for further detail.
Foreign mutual funds
Yes
Yes
Domestic mutual fund investing in foreign stocks and securities
No
No
Foreign accounts and foreign non-account investment assets held by foreign or domestic grantor trust for which you are the grantor
Yes, as to both foreign accounts and foreign non-account investment assets
Yes, as to foreign accounts
Foreign-issued life insurance or annuity contract with a cash-value
Yes
Yes
Foreign hedge funds and foreign private equity funds
Yes
No
Foreign real estate held directly
No
No
Foreign real estate held through a foreign entity
No, but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate
No
Foreign currency held directly
No
No
Precious Metals held directly
No
No
Personal property, held directly, such as art, antiques, jewelry, cars and other collectibles
No
No
‘Social Security’- type program benefits provided by a foreign government
No
No

Source: http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements