Taxpayers with certain foreign held assets will be required to describe those assets on a new form which must be attached to their 2011 Form 1040 individual income tax returns. The new form, still in draft format is Form 8938. The use of the new form is mandated under section 6038D of the HIRE Act, which is a 2010 amendment to the Internal Revenue Code.
If an individual taxpayer held $100,000 in specified foreign financial assets at anytime during 2011 or had held $50,000 in such assets at the end of the year reporting is required. Specified Foreign Financial assets include investments that produce interest or dividends and include listed and non-listed funds. Failure to report specified foreign financial assets through the use of Form 8938 subject the taxpayer to penalties up to $50,000. but that is not the end of the range of penalties.
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