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Form 8938, individual taxpayer has CFC. It is above

Form 8938, individual taxpayer has...
Form 8938, individual taxpayer has CFC. It is above threshold for Form 8938, so reporting on 8928 that CFC is reported on Form 5471. However, CFC has financial deposit accounts that taxpayer has signature authority over. Are these deposit accounts also reported on Form 8938.
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Answered in 1 hour by:
5/13/2017
Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 287
Experience: Director
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If I understand your question correctly... Form 8938 would only accompany the tax return for the individual or corporation who has title to the foreign accounts. If his CFC has title, then only 5471 is needed as he is owing the CFC. This form might be required for a corporation as some corporations can be the have a CFC. So, FORM 8936 is not needed unless the CFC also has a US presence and files a return with the IRS.

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Customer reply replied 1 year ago
Correct, the individual owns majority in the CFC and the CFC has title to the bank accounts . I am reporting the CFC on the form 5471 on the Form 1040 and disclosing it on the 8937. The individual does not need to report his signatory interest in the bank account(s) of the CFC as they are covered on the Form 5471, correct?

That is correct, but I don't think you need a 8938 at all. That would accompany an 1120 of the foreign corporation if it has to file a US return. Otherwise, 5471 accomplished what you need.

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Customer reply replied 1 year ago
Matthew, please help me understand why you do not think the 8938 needs to be filed with the 1040. Per the 8938 instructions,
When and How To File
Attach Form 8938 to your annual return and file by the due date (including extensions) for that return. An annual return includes the following returns.
Form 1040, Form 1040NR, Form 1041, Form 1041-N, Form 1065, Form 1120,Form 1120-S.
and goes on to state:
Exceptions to Reporting
Duplicative reporting. You do not have to report any asset on Form 8938 if you report it on one or more of the
following forms that you timely file with the IRS for the same tax year.
[i.e.] Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations.
Instead, you must identify on Form 8938 the form(s) on which you report the specified foreign financial asset and
how many of these forms you file.These instructions are the authority I am using that I do need to include the 8938 in the return, if only merely to report that the asset is included in the 8938. However, I can find no authority to confirm if the IRS considers the bank accounts of the CFC as specified foreign financial asset of the taxpayer with signature authority because that individual owns > 50% of the CFC.The 8938 instructions also state
Interests in assets held in financial accounts. If you have an interest in a financial account that holds specified foreign financial assets, you do not have to report the assets held in the account.So it would appear the bank accounts are not in play, but the 8938 is (assuming assets are > thresholds)Assuming I am incorrect, please show me where the 5471 has accomplished what I need so I stop worrying!

The bank accounts are in the name of the CFC, correct? Unless the CFC is filing a US return, you do not need a 8938 as that is for accounts owned by US taxpayors. If the CFC had a US presence and filed a 1065 or 1120, it would attach the 8938.

...

The US taxpayor of a CFC files a 5471, this contains the CFC's assets. See Schedule F, line 1 - this will have the cash of the CFC. Along with Schedule E, the IRS will know the financial activities of the CFC.

Matthew Breecher
Matthew Breecher, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 287
Experience: Director
Verified
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