The U.S. uses a global approach to income and estate tax. Many of the other G-20 countries use a territorial system. The result is that U.S.taxpayers, are now faced with enhanced disclosure and enforcement issues.
Form 8938 is required for U.S. taxpayers as part of Form 1040 whose aggregate “specified foreign financial assets” exceed specified values depending on filing status. The value test is applied against the greater of the highest value in the year or the year end value. Example: individuals who have aggregate value in excess of $75,000 at any point during the year or $50,000 at year end must comply. Form 8938 is required under the HIRE Act as part of IRC section 6038D. It is important to note that the disclosures required under IRC section 6038D include foreign trusts which are treated as “grantor trusts” under IRC section 6048. What does all this mean for taxpayers?
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