Foreign Trust Question on Schedule B

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wmwilliam67
Posts: 8
Joined: Mon Oct 22, 2012 3:08 pm

Foreign Trust Question on Schedule B

Post by wmwilliam67 »

I received a distribution from a Canadian RRSP in 2011. When filing my U.S. taxes this year, this distribution was declared on Form 8891 and line 16a on Form 1040.

Perhaps due to an oversight on my part, the checkbox on line 8 in Part III of Schedule B was ticked off as NO instead of YES.

This should have no effect on taxes since the distribution was already declared on the original filing.

Should I formally amend the return?, i.e. send the IRS an new Schedule B with YES ticked of instead of NO? My guess is that I should do it, but am not totally sure since it should have no effect on my taxes.

I might be amending my 2011 tax return anyway to claim a foreign tax credit so should I do it at that time?
wmwilliam67
Posts: 8
Joined: Mon Oct 22, 2012 3:08 pm

Post by wmwilliam67 »

I basically don't want to open up a can of worms if I don't have to. But I also obviously want to do the right thing. Perhaps I'm being hyper-anal. idk.
nelsona
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Post by nelsona »

These days, I advise making absolutely sure that all things related to foreign items be done exactly correct, so would send in a 1040-X with a copy of your sched B, with the box corrected.

Btw, are you determining the 16b amount correctly?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
wmwilliam67
Posts: 8
Joined: Mon Oct 22, 2012 3:08 pm

Post by wmwilliam67 »

I calculated a factor F = (V-C)/V where V is the current value of the RRSP, C is to total contributions.

Then that factor F was multipled by the amount of the distribution to arrive at the taxable amount on line 16b
wmwilliam67
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Post by wmwilliam67 »

Basically the taxable amount on the distribution is the proportion due to gains in your RRSP. If 1/2 the value of your RRSP was due to gains and the other 1/2 due to contributions, then the taxable amount on your distribution would be 1/2 the distribution.

Assuming this is correct?
ikeaidea
Posts: 76
Joined: Wed Dec 29, 2010 7:11 pm

Post by ikeaidea »

For Schedule B, if only a box that not checked, I believe it is ok because there will no penalty be posted on this issue. IRS jsut want this to cross check the other forms, 3520, TD F...

Nelsona, please correct me if you have strong supporting. Thx.
nelsona
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Post by nelsona »

I gave my answer.

williams, the C in your equations would only be contributions if you have been a US citzien all your taxpaying life.

Otherwise, C is the bbok value of your RRSP when you became a US taxpayer, plus any subsequent contributions.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bojo1965jon
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Re: Foreign Trust Question on Schedule B

Post by bojo1965jon »

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ND
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Re: Foreign Trust Question on Schedule B

Post by ND »

IRMs are good places to get inside the heads of IRS auditors.

comparing your missed trust box tickmark to the FBAR tickmark in the FBAR context discussing “willful blindness,” IRM 4.26.16.4.5.3 states:

“An example that might involve willful blindness would be a person who admits knowledge of and fails to answer a question concerning signature authority at foreign banks on Schedule B of his income tax return. This section of the return refers taxpayers to the instructions for Schedule B that provide further guidance on their responsibilities for reporting foreign bank accounts and discusses the duty to file the FBAR. These resources indicate that the person could have learned of the filing and recordkeeping requirements quite easily. It is reasonable to assume that a person who has foreign bank accounts should read the information specified by the government in tax forms. The failure to follow-up on this knowledge and learn of the further reporting requirement as suggested on Schedule B may provide some evidence of willful blindness on the part of the person. For example, the failure to learn of the filing requirements coupled with other factors, such as the efforts taken to conceal the existence of the accounts and the amounts involved may lead to a conclusion that the violation was due to willful blindness.
THE MERE FACT THAT A PERSON CHECKED THE WRONG BOX, OR NO BOX, ON A SCHEDULE B IS NOT SUFFICIENT, BY ITSELF, TO ESTABLISH THAT THE FBAR VIOLATION WAS ATTRIBUTABLE TO WILLFUL BLINDNESS.”
nelsona
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Re: Foreign Trust Question on Schedule B

Post by nelsona »

2012 question, followed by two recent spam posts
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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