Yes, I think that will look fine.
There are other instances where multiple copies of forms get filed but summary information only goes on the first one and where a note gets printed on the top. For example, if you have two copies of Form 1116, Turbo Tax prints "Copy 1" and "Copy 2" on top of each one, in the same font it uses to fill in the blanks. And the summary lines only get filled in on the first one.
Need more help with 8938 part 2
Moderator: Mark T Serbinski CA CPA
@backcountry -- From the remarks below, you will think I'm arguing with you; I'm not. Your statement explaining what Turbotax does is convincing, so I have no quarrel with you whatsoever on this issue. My comments below are concerned with the fact that the IRS has been unnecessarily unclear as to how the 8938 should be filled out. They must have done absolutely no real-world testing.
As regards the resemblance between Part IV of 1116 and Part III of 8938 -- Form 1116 is very clear: first of all, you *do* calculate the separate credits for each category, each on a separate 1116; second, the titles for lines 23 - 26 make it clear what goes on the 1116 "Summary". But for Part III of 8938, the IRS doesn't *say* what it wants, unless I missed something. I took Part III to be a summary of whatever particular items were listed on Part I and Part II of that same physical sheet. There was no list of things to be summed, as there is on the 1116.
"If you have more than one account, attach a continuation sheet with the required information for each additional account." I assumed (wrongly, I gather) that the IRS wanted to know where the income of "each additional account" was accounted for on the 1040. On that basis, I included Part III information for each account separately. It appears that that's wrong, but for the life of me I can't see what possible information Part III *actually* gives the IRS if all it does is echo lines 8a and 9a of form 1040.
Why didn't the IRS have the brains to formulate the 8938 the same way as the FBARs?
As regards the resemblance between Part IV of 1116 and Part III of 8938 -- Form 1116 is very clear: first of all, you *do* calculate the separate credits for each category, each on a separate 1116; second, the titles for lines 23 - 26 make it clear what goes on the 1116 "Summary". But for Part III of 8938, the IRS doesn't *say* what it wants, unless I missed something. I took Part III to be a summary of whatever particular items were listed on Part I and Part II of that same physical sheet. There was no list of things to be summed, as there is on the 1116.
"If you have more than one account, attach a continuation sheet with the required information for each additional account." I assumed (wrongly, I gather) that the IRS wanted to know where the income of "each additional account" was accounted for on the 1040. On that basis, I included Part III information for each account separately. It appears that that's wrong, but for the life of me I can't see what possible information Part III *actually* gives the IRS if all it does is echo lines 8a and 9a of form 1040.
Why didn't the IRS have the brains to formulate the 8938 the same way as the FBARs?
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backcountry
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Filo, I'm sure we could find plenty of other examples where the IRS has failed to demonstrate having enough brains. One is the numerous revenue procedures over the years for reporting RRSPs, finally ending up with the fairly simple Form 8891. Being the first year for Form 8938, I don't find the confusion surprising. I think they do request comments on their forms and instructions in case you care to write them.
I'm not an expert, but I doubt you will get in trouble for including the Part III information for each account separately. If the Forms 8938 get examined at all, I think a real person will be able to make sense of it.
"but for the life of me I can't see what possible information Part III *actually* gives the IRS if all it does is echo lines 8a and 9a of form 1040."
I can see a reason for the Part III information. If you have interest and dividends from both US and foreign accounts, the amounts on Part III of Form 8938 will be less than the amounts on lines 8a and 9a of Form 1040.
I'm not an expert, but I doubt you will get in trouble for including the Part III information for each account separately. If the Forms 8938 get examined at all, I think a real person will be able to make sense of it.
"but for the life of me I can't see what possible information Part III *actually* gives the IRS if all it does is echo lines 8a and 9a of form 1040."
I can see a reason for the Part III information. If you have interest and dividends from both US and foreign accounts, the amounts on Part III of Form 8938 will be less than the amounts on lines 8a and 9a of Form 1040.
Filo and Backcountry (and anyone else that wants to chime in)...
Just received the final draft of my 1040 and my "approval" from my Accountant regarding the 8938 forms.
(I advised them that i would tabulate these forms...as i did with my past and present FBARS and they would give me the green light to attach them if everything looked ok).
I realize i have had some inconsistencies from 'professionals' in the past, (and present) but this particular Firm seemed pretty adamant that my Computershare stock should go on Part 2 as opposed to Part 1.
I am therefore going to place it on Part 2
Both Filo and Backcountry have very convincing arguments regarding my situation, but as my Accountant explained to me;
In the eyes of the IRS this account will be looked at as 'shares' in a Canadian corporation and those shares are held by 'Computershare". Although they say (Computershare) they are an asset transfer company, we feel that the US definition would fall under the umbrella of 'broker' since they do charge you for transactions and the sale of shares.
Regardless of who is right and who is wrong....is there anything i should be concerned about by placing this account on Part 2? In other words, is there any extra forms or reporting i am expected (or have to do) to further tabulate this account?
Just received the final draft of my 1040 and my "approval" from my Accountant regarding the 8938 forms.
(I advised them that i would tabulate these forms...as i did with my past and present FBARS and they would give me the green light to attach them if everything looked ok).
I realize i have had some inconsistencies from 'professionals' in the past, (and present) but this particular Firm seemed pretty adamant that my Computershare stock should go on Part 2 as opposed to Part 1.
I am therefore going to place it on Part 2
Both Filo and Backcountry have very convincing arguments regarding my situation, but as my Accountant explained to me;
In the eyes of the IRS this account will be looked at as 'shares' in a Canadian corporation and those shares are held by 'Computershare". Although they say (Computershare) they are an asset transfer company, we feel that the US definition would fall under the umbrella of 'broker' since they do charge you for transactions and the sale of shares.
Regardless of who is right and who is wrong....is there anything i should be concerned about by placing this account on Part 2? In other words, is there any extra forms or reporting i am expected (or have to do) to further tabulate this account?
This is a very helpful discussion! Thanks!
I notice that the Part III Summary asks you to summarize the income from your accounts (interest, dividends, etc.). What about the last one on the list (g) credits? Is this supposed to be the Foreign Tax Credits associated with the income from your accounts? Or is this some other kind of "credit" they want you to report?
I notice that the Part III Summary asks you to summarize the income from your accounts (interest, dividends, etc.). What about the last one on the list (g) credits? Is this supposed to be the Foreign Tax Credits associated with the income from your accounts? Or is this some other kind of "credit" they want you to report?
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backcountry
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Mach7, I'm guessing here, but the problem I anticipate is that you will need to report the name of the company in Part II, line 7 but you will have statements and T slips in the name of Computershare. You could hedge on this by describing the holding in Part II, line 1 as "shares in XYZ company held by Computershare." Even if you do get questioned and have to produce some records, they will make sense.
Patti, I never noticed that before. I'm guessing on this one too. The instructions don't give much guidance other than to say that if you have deductions and credits with respect to an asset then that asset has to be reported on Form 8938. Other than FTC, I can't think of any other credit that comes into play. Fortunately, you get to state that this is your understanding by filling in the "Where reported" columns.
Patti, I never noticed that before. I'm guessing on this one too. The instructions don't give much guidance other than to say that if you have deductions and credits with respect to an asset then that asset has to be reported on Form 8938. Other than FTC, I can't think of any other credit that comes into play. Fortunately, you get to state that this is your understanding by filling in the "Where reported" columns.
Mach7 --
(1) I agree with backcountry's remarks about the description in Part II line 1. A long description is a good way to protect yourself when you want to express the truth about a messy situation.
(2) "we feel that the US definition would fall under the umbrella of a 'broker' " -- ??? -- well then it's a brokerage account (which is in fact holding your stock shares for you), so ask your accountants why it doesn't go in Part I.
(3) If you do wind up putting the XYZ shares in Part II, you are thereby explicitly saying that the shares are *not* in an account, so line 2 is the ID number of the stock certificate(s) (not the Computershare plan number). And lines 7ade contain the name and address of XYZ (not of Computershare).
(1) I agree with backcountry's remarks about the description in Part II line 1. A long description is a good way to protect yourself when you want to express the truth about a messy situation.
(2) "we feel that the US definition would fall under the umbrella of a 'broker' " -- ??? -- well then it's a brokerage account (which is in fact holding your stock shares for you), so ask your accountants why it doesn't go in Part I.
(3) If you do wind up putting the XYZ shares in Part II, you are thereby explicitly saying that the shares are *not* in an account, so line 2 is the ID number of the stock certificate(s) (not the Computershare plan number). And lines 7ade contain the name and address of XYZ (not of Computershare).
backcountry --
Your reply to Patti regarding 8938 Part III line (g) is disconcerting, to say the least. But then maybe I failed to understand what kind of FTC you had in mind.
(A) If line (g) were to refer to the Form-1116 FTC, this sounds like a real nightmare. Some people's investment income (possibly from both Canada and the US, say) might be complicated enough that deciding what portion of the Form-1116 FTC should go on Part III Line I(g) and Part III Line II(g) might be difficult.
(B) Are people really filling in line (g) to reflect Form-1116 FTC?
(C) Or is it possible that line (g) refers only to credits received in the foreign country? I know virtually nothing about such things, but it is conceivable, for example, that there might be a Canadian tax credit for investing in film production(???). Such a thing would be an adjunct to the income received directly from the investment and could be considered as additional income from the IRS's point of view.
Your reply to Patti regarding 8938 Part III line (g) is disconcerting, to say the least. But then maybe I failed to understand what kind of FTC you had in mind.
(A) If line (g) were to refer to the Form-1116 FTC, this sounds like a real nightmare. Some people's investment income (possibly from both Canada and the US, say) might be complicated enough that deciding what portion of the Form-1116 FTC should go on Part III Line I(g) and Part III Line II(g) might be difficult.
(B) Are people really filling in line (g) to reflect Form-1116 FTC?
(C) Or is it possible that line (g) refers only to credits received in the foreign country? I know virtually nothing about such things, but it is conceivable, for example, that there might be a Canadian tax credit for investing in film production(???). Such a thing would be an adjunct to the income received directly from the investment and could be considered as additional income from the IRS's point of view.
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backcountry
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I was going to drop out of this discussion but Filo's number (3) above made me think of something new.
Mach7, if you want to list the shares in Part II, what are you going to do about the account at Computershare? You have a relationship with them. There is an account number and statements. They will act on your instructions to sell the shares. It sounds like you have a financial interest in an account. You would need to report that on the FBAR form. Because of the duplication between FBAR and Form 8938, you would be creating some inconsistencies which could come to light.
The approach to use a long description in Part II could be helpful for preventing any further examination if only 8938 is reviewed. But what if IRS cross checks FBAR and 8938 and finds the inconsistency?
My strategy is always to avoid any reason for them to ask questions. Questions have a way of generating answers which generate more questions.
Mach7, if you want to list the shares in Part II, what are you going to do about the account at Computershare? You have a relationship with them. There is an account number and statements. They will act on your instructions to sell the shares. It sounds like you have a financial interest in an account. You would need to report that on the FBAR form. Because of the duplication between FBAR and Form 8938, you would be creating some inconsistencies which could come to light.
The approach to use a long description in Part II could be helpful for preventing any further examination if only 8938 is reviewed. But what if IRS cross checks FBAR and 8938 and finds the inconsistency?
My strategy is always to avoid any reason for them to ask questions. Questions have a way of generating answers which generate more questions.
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backcountry
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Filo, I'm only guessing here, but "credits" appears in the instructions in a list " . . . income, gain, loss, deduction, or credit . . . ." (search for it) I think that deductions and credits have their usual meanings. A deduction is something you subtract from total income to arrive at adjusted gross income or taxable income. A credit is something you subtract from tax (like FTC) to arrive at tax owing.
(A) This shouldn't be too complicated. You could just apportion by gross amounts.
(B) I don't know.
(C) I don't think so, since "deduction" is also in the list.
(A) This shouldn't be too complicated. You could just apportion by gross amounts.
(B) I don't know.
(C) I don't think so, since "deduction" is also in the list.
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backcountry
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Well, in that case, as regards " . . . credits . . . from holding or disposing of the asset . . . .", when I don't sell the asset but I do have distributions from the asset, the 1116-FTC I have arises from the distributions, *not* from "holding or disposing of the asset". So lines (g) are zero.
If you don't reply to this because you're tired of my haggling I certainly wouldn't hold it against you at all.
Nevertheless, I literally mean what I said in the first paragraph, and I find the IRS's explanations (?) of "deductions" and "credits" to be completely inadequate.
If you don't reply to this because you're tired of my haggling I certainly wouldn't hold it against you at all.
Nevertheless, I literally mean what I said in the first paragraph, and I find the IRS's explanations (?) of "deductions" and "credits" to be completely inadequate.
Filo wrote;
(3) If you do wind up putting the XYZ shares in Part II, you are thereby explicitly saying that the shares are *not* in an account, so line 2 is the ID number of the stock certificate(s) (not the Computershare plan number). And lines 7ade contain the name and address of XYZ (not of Computershare).
Backcounrty wrote:
Mach7, if you want to list the shares in Part II, what are you going to do about the account at Computershare? You have a relationship with them. There is an account number and statements. They will act on your instructions to sell the shares. It sounds like you have a financial interest in an account. You would need to report that on the FBAR form. Because of the duplication between FBAR and Form 8938, you would be creating some inconsistencies which could come to light.
These are two very good arguments for placing my account on Part 1 as opposed to Part 2.
Part 1 wins..
Thank you guys!
(3) If you do wind up putting the XYZ shares in Part II, you are thereby explicitly saying that the shares are *not* in an account, so line 2 is the ID number of the stock certificate(s) (not the Computershare plan number). And lines 7ade contain the name and address of XYZ (not of Computershare).
Backcounrty wrote:
Mach7, if you want to list the shares in Part II, what are you going to do about the account at Computershare? You have a relationship with them. There is an account number and statements. They will act on your instructions to sell the shares. It sounds like you have a financial interest in an account. You would need to report that on the FBAR form. Because of the duplication between FBAR and Form 8938, you would be creating some inconsistencies which could come to light.
These are two very good arguments for placing my account on Part 1 as opposed to Part 2.
Part 1 wins..
Thank you guys!