I'm filling out the TDF 90-22.1 for the first time (always used a tax preparer before this year, and they never filed this from for me before). I just wanted to get a couple of points clarified before I submit the form.
1) In the instructions for Item 15, it seems to contradict itself. It says, "The maximum value of an account is the largest amount of currency or non-monetary assets that appear on any quarterly or more frequent account statement issued for the applicable year."
But then later it also says, "The value of stock, other securities, or other non-monetary assets in an account is the fair market value at the end of the calendar year."
So which is it? The first quote says that non-monetary assets must be valued at their highest value during the year, but the second quote completely contradicts this and says to only use the end-of-year total for non-monetary assets.
So I'm not sure how to proceed. For an investment account which has a mixture of stocks, mutual funds, and even a small bit of cash all together - how do I treat this account? Do I follow the first quote and just report the highest amount during the year? Or do I follow the second quote and just report the end-of-year total? Or do I use some mixture of the two quotes, where I use the end-of-year total for the stocks and mutual funds, but use the highest total throughout the year for the cash, and then combine the two totals?
They worded the instructions very poorly.
2) With respect to exchange rates - the instructions say, "In valuing currency of a country that uses multiple exchange rates, use the rate which would apply if the currency in the account were converted into Unites States dollars at the close of the calendar year."
What constitutes multiple exchange rates? Doesn't every currency only have one US exchange rate? I'm sure that this probably doesn't apply to me, but it seems awfully confusing.
Clarifications for TDF 90-22.1
Moderator: Mark T Serbinski CA CPA
I have a couple of questions, too. What do you do if a savings account was closed during the year, and the funds transferred to a new account? Do you report both, each with its highest balance ? If you do, it would falsely inflate your savings. Is that ok? Or do you report only the balances of accounts you still hold at the end of the year?
Also, if you have signing authority over a foreign company's books, but no financial interest in it, of what use would that information be? Does anyone know?
Thank you for your help,
Marge
Also, if you have signing authority over a foreign company's books, but no financial interest in it, of what use would that information be? Does anyone know?
Thank you for your help,
Marge
Err on the conservative side. They are not looking for how much you have. They are wanting to know what accounts you have.
Put the highest value you had in the year in all accounts you had in that year.
There are some countries that 'tie' their currency to the US one, at a constant rate. For those that do not, like Canada, all Treasury is saying is to use the year-end exchange rate to determine the highest value for any point during the year, to avoid having to do a calculation for every single day just to come up with the highest.
This is not the most important thing you will do today.
Put the highest value you had in the year in all accounts you had in that year.
There are some countries that 'tie' their currency to the US one, at a constant rate. For those that do not, like Canada, all Treasury is saying is to use the year-end exchange rate to determine the highest value for any point during the year, to avoid having to do a calculation for every single day just to come up with the highest.
This is not the most important thing you will do today.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks for the advice nelsona.
I think I might have figured out what they were trying to say with the instructions. For the non-monetary assets, I think they were trying to say that if you didn't receive regular quarterly (or more frequent) statements for your stocks, etc., then just go ahead and report the end-of-year value instead of trying to track it yourself throughout the year. But they completely forgot to include the part about "if you didn't receive regular statements", so they just ended up with two completely contradictory instructions.
As for the exchange rate, I suspected that it was what you said (referring to a dynamic exchange rate vs. a fixed or tied rate), but the first sentence in the instructions was "Convert foreign currency by using the official exchange rate at the end of the year." So whether or not the exchange rate fluctuates, they already told you to use the rate on Dec 31. So it was completely unnecessary to make another sentence about multiple exchange rates with the same country. It just made it needlessly confusing.
It feels like they just grabbed some intern off the street to quickly write up some instructions for this thing.
But your advice has been followed, and was greatly appreciated. Thanks.
I think I might have figured out what they were trying to say with the instructions. For the non-monetary assets, I think they were trying to say that if you didn't receive regular quarterly (or more frequent) statements for your stocks, etc., then just go ahead and report the end-of-year value instead of trying to track it yourself throughout the year. But they completely forgot to include the part about "if you didn't receive regular statements", so they just ended up with two completely contradictory instructions.
As for the exchange rate, I suspected that it was what you said (referring to a dynamic exchange rate vs. a fixed or tied rate), but the first sentence in the instructions was "Convert foreign currency by using the official exchange rate at the end of the year." So whether or not the exchange rate fluctuates, they already told you to use the rate on Dec 31. So it was completely unnecessary to make another sentence about multiple exchange rates with the same country. It just made it needlessly confusing.
It feels like they just grabbed some intern off the street to quickly write up some instructions for this thing.
But your advice has been followed, and was greatly appreciated. Thanks.