Alert - AICPA Submits Comments to IRS on Form 8938
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Alert - AICPA Submits Comments to IRS on Form 8938

​In 2010, Congress enacted provisions commonly known as the Foreign Account Tax Compliance Act (FATCA) that has, and will continue to have, far-reaching impacts on reporting requirements of U.S. persons with regard to the ownership of foreign assets. Form 8938 (Statement of Foreign Financial Assets) requires U.S. persons with significant direct interests in “specified foreign financial assets” to report those holdings. Significant interests include an aggregate value of reportable assets that exceed $50,000 for single persons and $100,000 for married couples filing jointly at the end of the year. Other thresholds measured at their maximum point during the calendar year may trigger a reporting requirement even if the year-end thresholds are not met.

While taxpayers have been required to report direct and indirect ownership of foreign financial assets on Treasury Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, commonly referred to as “FBAR”) since 1970, the assets reported on the FBAR were generally easily valued as non-marketable equity interests or the foreign contracts were not required to be reported on this form. Issues related to the filing of an FBAR were generally related to identifying indirect interests or identifying accounts where the taxpayer had a signature or other authority.

Form 8938 requires the disclosure of additional classes of assets, which include (1) direct interests in foreign financial assets (that are also required to be disclosed on the FBAR), (2) interests in foreign pensions, (3) interests in foreign entities, (4) interests in foreign trusts, and (5) financial instruments or contracts with a non-U.S. counterparty or issuer. These non-monetary “specified foreign financial assets” must be valued at calendar year-end and at their highest aggregate fair market value during the year for reporting purposes.

While the IRS has provided guidance that third-party appraisals are not required for non-marketable specified foreign financial assets, it has not defined any safe harbors on which taxpayers may rely. Current IRS guidance also has uncertainty with regard to foreign financial contracts that must be disclosed. 

The Comment Letter requests that the Internal Revenue Service:
  • Provide safe harbor valuation options. The AICPA recommends that tax basis or book value be available as a safe harbor value when a non-monetary asset does not have a readily discernible fair market value.
  • Provide guidance that harmonizes the valuation standards for foreign financial assets that must be disclosed on both Forms 8938 and FBAR.
  • Provide clarity on when certain foreign contracts must be treated as specified foreign financial assets. Examples of ambiguous contract situations include non-business lease and rental real estate contracts with foreign lessors.
The Comment Letter can be found at

The information provided in this alert is only a general summary and is being distributed with the understanding that Plante Moran, PLLC is not rendering legal, tax, accounting, or other professional advice, position, or opinions on specific facts or matters and, accordingly, assumes no liability whatsoever in connection with its use.

This Alert was authored by Christine Ballard, CPA, from the Praxity affiliate Dixon Hughes Goodman LLP. Christine is located in DHG’s Tysons Corner, Virginia, office. This Alert has been provided to North American member firms of Praxity as part of the group’s collaborative efforts and initiatives and illustrates how Praxity members share the same desire to deliver professional excellence and high service standards. Praxity, AISBL is the largest global alliance of independent accounting firms and the world’s eighth largest association of accounting firms.

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