No FBAR wallet reporting example in the entire world


#21

OK @Peter_Rehm and everybody,
I am almost done with FBAR.
Here’s what I’ll use

Maximum account value : USD value of max BITCOIN CASH ever in wallet…
Type of account : OTHER | CRYPTOCURRENCY WALLET
Account number or other designation : 1a2b3c4d…(wallet address)*
Financial institution name : PERSONAL BITCOIN CASH WALLET OF DANIEL JACOBSON
Address : my address

Maximum account value : add USD value of max BITCOIN CASH + LITECOIN + etc. + FIAT cash all together
Type of account : OTHER | CRYPTOCURRENCY EXCHANGE ACCOUNT
Account number or other designation : 9999 (customer number)
Financial institution name : NERD EXCHANGE INC.
Address : 123 NERDSVILLE CRESCENT…

*“A Bitcoin Wallet is an Account.” Source:
https://www.goldinglawyers.com/category/bitcoin-fbar/


#22

Only one suggestion: Be careful with your answers. They must be absolutely factual.


#23

I’m just curious how the hell a FBAR can apply to a Bitcoin wallet? I’m in America and my ledger is in America?


#24

The moment your plane leaves the U.S. with your Ledger in your pocket…


#25

Also the “Blockchain” is as much in a foreign country as in the U.S., one
might say even more so… But I’m no lawyer.


#26

Good thing I’ve never left the country with my ledger. In terms of the block chain is everywhere technicality I’ll take my chances haha. I will report binance if I ever put more than 10k on it though.


#27

Hmmm. I think if you keep it with you and not accessed the whole time that you would not breach the rule. But I agree that if your Trezor goes abroad there are risks.

Have you had any incidents where say, a border agent, asked why you possessed your hardware wallet?


#28

Curious if you have no money on a foreign exchange but it came from there do you need to report the funds on FBAR if the paper/hardware wallet is in the US?


#29

Are you talking about crypto or other investments that are being managed by a US based investment house?

If it’s your personal crypto the rules are that:

  • if it is valued at over $10K
  • at any time during the year

You must report it.


#30

Just Crypto. So to summarize, if it hit 10k while on a foreign exchange BEFORE being transferred to a cold storage wallet that is in the U.S., complete the FBAR.

If it hit 10K AFTER being transferred from a foreign exchange to a cold storage wallet in the U.S. no FBAR?

Thanks in Advance Peter!


#31

You got it. asdfasdf


#32

If I were the IRS I would think: Hmmm, “bitcoin” has no registered headquarters address, but

China dominates Bitcoin mining. Three of the top pools where members combine their processing power and split the rewards are Chinese and alone account for more than half of the global hashrate, according to blockchain.info, an bitcoin-data aggregator.

therefore bitcoin certainly sounds more foreign than U.S., so any U.S. person with bitcoin, even if he never left the U.S., must file a FBAR.


#33

The Luxembourg address of the Bitcoin Foundation gives some people pause. I don’t think its relevant though.


#34
$ whois bitcoin.com | grep -P '^R.*(Name|Country)'
Registrant Name: Roger Ver
Registrant Country: KN
$ whois bitcoin.org | grep -P '^R.*(Name|Country)'
Registrant Name: WhoisGuard Protected
Registrant Country: PA

#35

Hi guys! I just started studying the FBAR requirements today and after a thorough online search, it’s looking like the FBAR is not required after all. Most arguments that it would be required seem to stem from Golding lawyers, 2017/09/14 .

However, those sources appear to be wrong and/or outdated, since the latest comments from FinCEN on 2017/11/07 directly stated that “we (FinCEN) do not expect it (virtual currency) to be reported”.

I’m planning to only report my fiat accounts on foreign crypto exchanges on my FBAR, along with a mention on this on the FBAR cover letter. Let me know your thoughts if you think I got it wrong!


#36

Thom,

I have a couple of thoughts on that:

  1. Not only fiat should be reported if you have it out there but offshore pension plans, stocks, bonds, mutual funds … (you get the idea)
  2. I see your reference

"we do not expect it to be reported,” Jeremy Kuester, deputy associate director for policy at FinCEN, said at the American Institute of CPAs’ National Tax Conference on November 7th, in Washington. “As the regulations are currently written, a virtual currency wallet would not fall under our definition of an account.” Kuester added that FinCEN may still consider putting out official guidance since it is still continuing to monitor the evolving situation.

Up until now every other lawyers opinion I’ve read indicates that they consider your hardware wallet to be a financial institution. Yeah, that opinion benefits only the lawyers and CPA’s who are filing these things.

I’m on the conservative side of the argument. Neither the IRS or Treasury is dumb. I would spend the extra money to at a minimum file the information returns to the IRS where no one has clarified what they expect to be filed. It’s cheap insurance and I don’t know if Mr. Kuester’s comments make that the official policy.

And then through April 15 it’s up to you to monitor whether Treasury or the IRS comes out with new regulations on virtual currency. Filing with the Treasury cannot hurt. At a minimum they just dispose of your information if it’s not needed.


#37

I recommend people write FBARquestions@irs.gov and FRC@fincen.gov and
post your results here.

FRC FRC@fincen.gov writes:
Good day,

If your cryptocurrency is held in a financial account at a foreign financial institution, you would list it just as you would any other foreign financial account. You should view Part II of the FBAR to view the information associated with your account that you would need to list on the FBAR.

Regards,

FinCEN’s Resource Center

-----Original Message-----
From: Dan Jacobson [mailto:jidanni@jidanni.org]
Sent: Friday, January 26, 2018 10:43 AM
To: FRC FRC@fincen.gov
Subject: [EXTERNAL] How to list cryptocurrency wallets on FBAR?

How to list cryptocurrency wallets on FBAR?

I still am waiting for their answer on what about paper wallets, cold
storage wallets, 12 word mnemonic stored in head only wallets… Yes,
all of United States persons outside of the United States.


#38

OK, here’s the method I will use for computing a FBAR Item 15
cryptocurrency wallet maximum amounts:

FBAR Line Item Filing Instructions.pdf says:

Item 15. Enter the maximum value of the account in U.S. Dollars during the calendar year being
reported. See the General Instructions on Monetary Amounts for guidance on determining the
maximum value of an account. Use the end of the year conversion rate.

Then in General Instructions:

Monetary amounts: When recording the maximum value of accounts, record all amounts as
U.S. Dollar amounts rounded up to the next whole dollar. The amount $15,265.25 would be
recorded as $15,266. The maximum value of the account can be determined using the following
steps.
NOTE: After determining the value of the account, as described below, if the value results in a
negative (minus) value, enter zero (0) in item 15, “Maximum account value.”
Step 1. Determine the maximum value of each account (in the currency of that account) during
the calendar year being reported. The maximum value of an account is a reasonable
approximation of the greatest value of currency or nonmonetary assets in the account during
the calendar year. Periodic account statements may be relied on to determine the maximum
value of the account, provided that the statements fairly reflect the maximum account value
during the calendar year. For Item 15, if the filer had a financial interest in more than one
account, each account must be valued separately. For an account denominated in U.S. Dollars,
the maximum value of the account is the largest U.S. Dollar value of the account during the
report year.
Step 2. In the case of non-United States currency, convert the maximum account value for each
account into United States dollars. Convert foreign currency by using the Treasury’s Financial
Management Service rate (select Exchange Rates under Reference & Guidance at
www.fms.treas.gov) for the last day of the calendar year. If no Treasury Financial Management
Service rate is available, use another verifiable exchange rate and provide the source of that rate.
In valuing currency of a country that uses multiple exchange rates, use the rate that would
apply if the currency in the account were converted into United States dollars on the last day of
the calendar year.

OK say my bitcoin wallet had 1 BTC in March, 3 BTC in June, back down to
1 BTC in November. So the maximum BTC was 3. Now we have completed Step
1 in the instructions above.

Now for step 2 I will use one of the many daily quotation services to
find the BTC/USD exchange rate for 12/31.
I will try to “provide the source of that rate” next to the number I enter.

Note that nowhere in the instructions does it concern itself with spikes
and dips in the BTC/USD exchange rate throughout the year. It only
repeats “on the last day of the year”.

Also nowhere does it say “if on June 5th you had … and the exchange
rate on that day was …”. All it mentions is step 1) greatest value (in
that currency itself) for entire year, and step 2) then convert that
value into USD at end of year rate.

I’ll Cc: FBARquestions@irs.gov and FRC@fincen.gov just in case there is something I missed.


#39

OK I found


and can confirm that it does not contain bitcoin.


#40

OK, I’m making great progress. Reading https://www.coindesk.com/api/ I
have gotten the Bitcoin Price Index for the close of 2017!

$ wget -O - “https://api.coindesk.com/v1/bpi/historical/close.json?start=2017-12-31&end=2017-12-31” | json_pp

{
   "time" : {
      "updatedISO" : "2018-01-01T00:03:00+00:00",
      "updated" : "Jan 1, 2018 00:03:00 UTC"
   },
   "bpi" : {
      "2017-12-31" : 13860.1363
   },
   "disclaimer" : "This data was produced from the CoinDesk Bitcoin Price Index. BPI value data returned as USD."
}

I suppose I will mention the source was API.COINDESK.COM