In 2011, the U.S. District Court for the Eastern District of California denied the IRS’ ex parte petition for leave to serve a “John Doe” summons on the California State Board of Equalization in an effort to get information about its citizens of real property transfers from parents to children or from grandparents to grandchildren that were made for less than fair and adequate consideration, i.e., a gift, from January 2005 to December 2010.  This data is compiled from the real property tax exemption forms filed with each county assessor’s office.  I expect most of the other states have a similar exemption reporting system for exempting reassessments for real property tax purposes. The IRS claimed that an estimated 50 to 90 percent of the individuals in this class didn’t file Form 709 to report taxable gifts (exceeding $13,000 per person/per year).

At first, the Court denied the IRS’ request for information it was seeking expressing “serious concerns” about the “John Doe” summons on a state for a myriad of reasons.  Nevertheless, the Government was able to convince the Court of the validity of their request for information, and the Court has granted relief pursuant to a revised summons (In re Tax Liabilities of John Does 2012-1 USTC 50, 104, 108 AFTR 2nd 7499) which allows the IRS to access this information from the State.

Taxpayers who failed to report taxable gifts should reconsider their decision. There is no penalty for late filing if no tax is owed on the gift.  The filing of the return will also start the clock running under the 3-year statute of limitations for revaluing the gift.

Gifts of Entities:  Making a gift of entities (such as corporations, LLCs and LPs) which hold real estate without filing the required gift tax return could also become problematic.  California’s Board of Equalization is in the process of amending its statutes to require legal entities holding real estate to file a change of ownership statement within 90 days of the date of a change in ownership or change in control of the entity.

If the foregoing situation applies to you, a visit to your tax advisor is critical.  If you are going to take advantage of the current but temporary $5,120,000 gift exclusion, you will want to make sure you have captured your prior unreported gifts since the gift exclusion is cumulative.  You will likely not owe any penalties but it is imperative you accurately report the gift as it appears that the IRS will now be working with the states to find those taxpayers who have not been in compliance.

Follow this link for more information about taking advantage of the current gift tax exclusion.  Also, if you would like to stay connected, please follow us on Facebook.

Earlier this month, we discussed the proposal to reduce the effectiveness of dynasty trusts. In this post, we address a proposal labeled “Coordinate Certain Income And Transfer Tax Rules Applicable To Grantor Trusts.” This relatively innocuous-sounding provision would, in effect, put an end to a technique that has become the most important cornerstone of modern estate planning. And, indirectly, this proposal would eliminate the use of life insurance as an estate planning technique. Grantor trusts have been particularly important to the life insurance industry because almost all life insurance trusts (an “ILIT”) are, by their very terms, grantor trusts.

Although no one can realistically predict if or when Congress will eventually enact any of the proposals suggested by the Obama Administration, and some doubt that the grantor trust proposal will ever be enacted, there is always a possibility that the grantor trust proposal, and more likely several of the other proposals, will become law. Interestingly, proposals that eliminate tax planning techniques have a better chance of being enacted because Congress can thus raise tax revenues without raising tax rates.

As with any changes in the tax laws, the legislation would only apply to grantor trusts created after the legislation is enacted (the “Effective Date”). Therefore, all existing grantor trusts, and any grantor trusts created and funded before the Effective Date, would not be subject to this legislation. Individuals with a net worth exposed to the estate and gift taxes should consider the creation of a grantor trust, or make additional wealth transfers to an existing grantor trust, in order to take advantage of this and other planning opportunities that may be eliminated before the end of this year. Since Congress will address the Obama Administration’s proposals after the November elections, it is possible that the use of grantor trusts for estate planning may be eliminated by the end of this year. Rather than wait to see what happens with the Congress, we recommend that individuals considering estate planning create a grantor trust before it is too late to use this technique. There is no downside risk in acting now to adopt a technique that one would also use in the future. As such, you should work fast to avoid subjecting your estate planning to these proposals, which, if enacted into law, would probably take effect starting in 2013. Even more importantly, anyone considering the use of life insurance as part of their estate plan should act now!

This is how a grantor trust currently works.  Because a grantor trust is disregarded for income tax purposes, the grantor is obligated to pay the income taxes earned by the grantor trust. The grantor’s payment of the income taxes attributable to the grantor trust eliminates the income tax cost that a trust would otherwise incur; this increases the accumulation of the funds in the grantor trust increasing the amount of tax-free wealth transfer.  Interestingly, the trust creator’s payment of the income taxes on the grantor trust’s taxable income is not treated as a “taxable gift to the grantor trust.”

Example:     Assume an individual creates an irrevocable grantor trust and makes a gift of corporate bonds worth $5,000,000 to the trust using his $5,120,000 gift exclusion to avoid any gift tax.  The bonds pay an annual interest payment of $300,000 (a 6% yield) of taxable interest income each year to the grantor trust. Assuming the donor is in a 40% income tax bracket, the income taxes on $300,000 of interest income would be $120,000. If the trust had to pay the income taxes on its $300,000 of income, the trust would net only $180,000 after taxes. By treating the trust as a grantor trust (disregarded for income tax purposes), the individual who created the grantor trust would have to pay the $120,000 of income taxes, thus increasing the accumulation of funds in the trust by $120,000 and decreasing the donor’s taxable estate by $120,000 per year. Since the income tax paid by the grantor is effectively a “gift tax free” transfer of wealth to the trust, the trust income will continue to accumulate in the grantor trust free of all gift and estate taxes.  Over a 25 year period, the extra $120,000 of income earned in the grantor trust without the income tax burden will accumulate an additional $3,000,000 free of gift and estate tax.

Assume that at the end of 25 years, the Grantor dies and that the funds in the grantor trust have grown to $15,000,000 because all trust income is reinvested by the trust.   The reason for much of this growth is that the grantor trust accumulates all $300,000 of interest income each year instead of paying income tax and netting only $180,000 each year. Under the Obama Administration proposal, all $10,000,000 of the growth in the grantor trust’s assets over the original $5,000,000 gift in trust would be subject to estate taxes at the proposed 45% estate tax rate for an additional estate tax cost of $4,500,000. By creating a grantor trust grandfathered by the Effective Date, the potential estate tax savings in this example is $4,500,000.

The impact of this proposal on irrevocable life insurance trusts is even more profound as the following example illustrates.

Example:     An individual creates an ILIT and each year makes gift tax-free annual exclusion gifts to the ILIT to be used for the ILIT’s payment of the premiums on a life insurance policy on the individual’s life with a $5,000,000 death benefit. Under current law, upon the insured’s death, none of the $5,000,000 received by the ILIT is subject to estate tax. Under the Obama Administration proposal, the entire $5,000,000 paid on the life insurance policy is subject to the estate tax.

As you can see, two of the most effective estate planning techniques would be eliminated. Therefore, one should not take the risk of possible adoption of any of these proposals by Congress given that they can implement these techniques by year end and be grandfathered by the Effective Date.

If you have any questions regarding this important information and would like assistance in exploring your estate planning options, please contact us.

WE WILL NEVER SEE THESE TAX PLANNING OPPORTUNITIES AGAIN, SO DO NOT PROCRASTINATE.

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Beginning Monday, April 2, 2012, our new California office address will be:

1201 Dove Street, Suite 400

Newport Beach, CA  92660

The new location provides us with much needed additional office space, and for our visitors much improved accessibility to our building and office suite.

We look forward to your visiting our new Newport Beach, California location.

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March 05, 2012

Wealthiest Americans Fearful Of Liability Lawsuits, Survey Says

America’s wealthiest families increasingly worry that their wealth makes them a prime target for a high-stakes liability lawsuit in the current unstable period of high unemployment and weak economic growth, according to an ACE Private Risk Services survey released Monday.

But despite their concern, those same wealthy families are poorly prepared for such lawsuits and fail to recognize that their lifestyle can lead to a lawsuit. They underestimate the cost of the potential damages, and they misunderstand the affordability of effective protection. As a result, the survey contends that wealthy families often lack the proper types and amounts of liability insurance.

The survey, “Targeting the Rich: Liability Lawsuits and the Threat to Families with Emerging and Established Wealth,” polled individuals from households with more than $5 million of investable assets about their perceptions and behavior regarding the threat of personal liability lawsuits.

“Wealthy families feel increasingly targeted, especially given the national discourse over disparities in wealth, income, and taxation,” said Bob Courtemanche, division president of ACE Private Risk Services, the high net worth personal insurance business of the ACE Group.

Based on the study, more than two-thirds of the respondents surveyed think public perceptions of the wealthy have grown more negative since 2008. “Almost 40 percent believe they are more likely to be sued in the aftermath of the economic crisis, compared to only 7 percent who say they are less likely to be sued,” Courtemanche said. “And more than 80 percent agree their wealth alone makes them an attractive target for liability lawsuits.”

Jim Hageman, senior vice president of claims for global personal and small commercial insurance for ACE, said many of those families underestimated the risk. “Half of the people we surveyed thought the worst-case lawsuit would be less than $5 million,” he said. “But our experience is that awards for lawsuits involving serious injury can equal many times that amount.”

Weathy families tend to underestimate their potential liability from a car accident or other incident, they often lack sufficient liability insurance, according to the study. More than 40 percent of survey respondents reported carrying less than $5 million in umbrella liability insurance, including 21 percent who have none.

According to ACE executives, umbrella liability insurance is a critical part of a personal insurance program because the liability coverage in automobile and homeowner policies rarely exceeds $500,000. An umbrella policy provides additional coverage on top of those policies. Insurance companies specializing in insuring high net worth families usually offer coverage ranging from $1 million up to $100 million, and the cost can be offset by increasing the deductible amounts in the underlying homeowner and auto policies.

Relying on an umbrella policy or your general liability policy as  your sole source of protection could be a miscalculation.  Often insurance policies cover you if you “fall off the roof” but not if you “hit the ground” meaning carriers have been known to deny coverage where coverage questions arise.  The insurance company that insured the Twin Towers denied coverage as to some of the buildings using certain express policy exclusion provisions with the owner and the carriers litigating the issue of coverage.

It is socially responsible to carry a reasonable level of umbrella coverage, but the larger the policy limits, the larger the “target” you become for specious lawsuits.

Protecting you and your family with the appropriate type and amount of insurance and asset protection is critical to building effective firewalls to protecting your assets. Please give us a call so we can assist you in evaluating your total protection from proper insurance planning to proper total asset protection. At Jeffrey M. Verdon Law Group, LLP you get more than you expect, but exactly what you need.

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In 2008 Mark Zuckerberg, then 24, put $3,023,128 worth of Facebook stock into a grantor retained annuity trust.

Mark Zuckerberg and Dustin Moskovitz, the co-founders of Facebook and two of the world’s youngest billionaires, may seem too young to be thinking about estate planning. But in 2008, when they were both 24, they used an estate planning tool that is more familiar to people two or three times their age. It involved putting pre-IPO stock into a special kind of trust that will explode in value when the company goes public. In the process Zuckerberg and Moskovitz, by FORBES conservative estimate, will together shift $185 million to trust beneficiaries without having to pay gift tax. Sheryl Sandberg, Facebook’s CEO, who was then 39, used the same strategy to transfer at least $19 million tax-free.

There’s nothing illegal about what these executives did. In fact, their experience is a case study in how the ultra-rich and even the moderately wealthy can work within the parameters of the tax law to transfer vast sums of money without having to pay gift tax.

For more information about protecting assets and estate planning at any age, please contact our firm.

This week, the Obama Administration released its report detailing the myriad of changes coming to the tax laws, many of which are slated to take effect by the end of this year. This announcement should come as no surprise, as we have been warning of this coming tidal wave of change for the past two years.

Under the guise of the fair and equal treatment of millionaires and billionaires, the Obama Administration is proposing to substantially alter many key areas of the tax code, with many changes poised to prevent affluent taxpayers from utilizing several of the traditional wealth transfer planning structures.

This is not intended to be a complete review of the changes, but it will highlight the important changes that will certainly diminish the wealth transfer opportunities presently available.

One of the Obama Administration’s 2013 Revenue Proposals would limit the duration of the generation-skipping transfer (“GST”) tax exemption. The GST tax is imposed on transfers that skip a generation, for example, transfers from a grandparent to a grandchild. Upon the transferor’s death, to the extent distributions are made from the trust to the transferor’s grandchildren or other skipped persons, the GST tax will be payable on the value of the transfer at the highest estate tax bracket applicable in that year. Under current law, a person has a lifetime GST tax exemption ($5,120,000 in 2012) that can be allocated to all gifts in trust.

This is important because many states have repealed or limited the application of the Rule Against Perpetuities, so that trusts may continue forever (Florida allows trusts to last for up to 360 years). These trusts, commonly referred to as Dynasty Trusts, are a popular estate planning technique. By placing assets in a Dynasty Trust and allocating the GST exemption to those gifts, the assets can be held in trust without being subject to any further gift, estate, or GST taxes from generation to generation. However, the new Revenue Proposals would tax a trust on the value of all of its assets at the proposed new 45% estate tax rate every 90 years.

Fortunately, a trust created before the enactment of the new law will be forever exempt from the new GST tax. The proposed change to limit the GST tax exemption, coupled with the Obama Administration’s additional proposal to reduce the GST tax and gift tax exemptions back to their 2009 level of $1,000,000 (as compared to the $5,120,000 available this year) creates a sense of urgency for anyone thinking of making a gift in trust during the remainder of 2012. Such gifts must be made prior to the enactment of the proposed legislation, which may occur by the end of this year.

In summary, such trusts formed and funded after the implementation of the tax change would be taxed every 90 years. On the other hand, a trust created and funded before the enactment of the new law will be forever exempt from the new GST tax. Therefore, we recommend that you consider making a gift in trust, even if it is of a small amount, as soon as possible to take advantage of having a trust that is exempt from the proposed 90 year tax on Dynasty Trusts. Most importantly, once a GST tax exempt Dynasty Trust is in place, it can be used as a platform for future estate planning without having to worry about exposing the trust to an estate tax every 90 years.

Furthermore, with the Obama Administration’s proposal to limit the gift tax and GST tax exemptions to $1,000,000, anyone considering gifts in trust in excess of $1,000,000 should also take advantage of this limited opportunity available for the remainder of 2012.

If you have any questions regarding this and need assistance in implementing your gift, please contact Susan Jerome, Director of Client Services, to schedule a no charge consultation.  (susan@jmvlaw.com)

I will put out another post summarizing additional important and impactful suggested tax law changes under the Obama Administration’s Revenue Proposals.

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(1) establishment of a foreign asset protection trust by the company itself and

(2) settlement of a group foreign asset protection trust for a business with multiple business owners or associates.

Entity Asset Protection Trust

In earlier posts, I have described the design and benefits of forming a foreign asset protection trust (APT), usually in the context of protecting one’s individual assets. The Cook Islands is a jurisdiction with very favorable trust laws, providing significant protection from a Settlor’s creditors even where the Settlor is also the beneficiary of the trust. A business can also form an offshore APT, which we call an “entity asset protection trust” (EAPT), and name the business entity as the sole beneficiary of the EAPT. However, the EAPT can be designed to allow direct distributions to the business owners so long as the distributions are in the best interest of the business and are made “on behalf of the business.”

If properly formed, the EAPT is considered a grantor trust for income tax purposes, meaning that the income from the trust assets is attributed to the company and not to the EAPT.

Furthermore, contributions by the company to the trust will not constitute a “completed gift,” thus avoiding any gift tax issues. The EAPT should be established for a business purpose, such as forming a separate investment vehicle for trust assets and to preserve those assets against unforeseen liability, so that the trustee may distribute assets back to the business and to the business owners without incurring individual tax liability for the owners or for the trust. Ideal assets to be held in the EAPT are the company’s liquid assets including its retained earnings and intellectual property, i.e., patents, trademarks, licenses and other similar assets.

If the trust is established for the personal planning needs of its owners, any distributions from the business to its owners will likely trigger negative income, gift, and estate tax consequences. Business owners should carefully document the “business purpose” by describing it in the company’s minutes, including the company’s beneficial interest in the trust as an asset on the company’s financial statements, and notating each distribution to a business owner as one made for the direct benefit of the company.

In addition to being the Settlor and sole beneficiary of the trust, the business can also be the trust protector. As protector, the business would have the authority to veto trustee investment and distribution decisions, allowing the business to still retain some control over the trust assets. Moreover, naming the company as the trust protector offers further evidence that the trust was created for the benefit of the business rather than for the owner’s personal benefit. Finally, the EAPT can also be designed so that these protective provisions only apply so long as the business is controlled by persons that acquired his/her ownership interest through a bona fide voluntary sale or gift from a previous owner.

Group Asset Protection Trust

Another option to consider is the group asset protection trust (GAPT). This structure is particularly useful for business owners who share ownership with multiple individuals, such as is often the case with CPAs, lawyers, physicians and consultants, all of whom may be subject to future unforeseen liability claims. The GAPT is a very cost effective way to reduce the expense to each owner to create effective “firewalls” that insulate certain assets owned by the business owner and his or her family. With a GAPT, instead of the APT having a single settlor, each participating owner is a settlor with the other owners in a common or group APT. The GAPT will have a sub-APT created under the master GAPT document for the benefit of each participating group member. That way, each owner of the company can place his or her selected assets in the GAPT and enjoy the protections afforded by the APT just as though the APT was established for the individual without other members.

The downside to using a GAPT is that each Settlor of the GAPT is limited to using the same method for distributions of the trust’s assets to their intended heirs, rather than having the ability to use the customized dispositive provisions associated with individual APTs. However, at any time, the Settlor of a GAPT may split off from the GAPT and convert his or her sub-trust into a personal APT (such as when the level of assets held in the sub-trust becomes large enough to warrant formation of an individual APT). In this litigious world, the GAPT may be a very cost effective structure to provide effective asset protection planning at a very reasonable price tag.

Contact Susan Jerome, Director of Client Services, for further information (susan@jmvlaw.com or 800-521-0464).

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What is the employer’s obligation with respect to employee meal and rest periods?  Must an employer force its employees to take these breaks, or is it enough to make them available for employees who are interested in taking them?  An incorrect answer can be expensive.  California courts have seen a marked increase in employee class actions alleging meal and rest period violations.  Employees seek an extra hour of pay for each day that they miss a meal period or a rest break, along with miscellaneous penalties, attorney fees, and interest, going back three to four years.

Recent oral arguments before the California Supreme Court raise the question, is it the employer’s duty to “provide” or “ensure” a meal break.  The decision if mandated retroactively rather than prospectively could expose California employers to a new onslaught of lawsuits on this issue as well as potentially huge liability.   Whatever the outcome, the Brinker case will be one of the most important wage and hour cases in California’s history.

By way of background, in the San Diego case of Brinker v. Superior Court (Hornbaum), the plaintiffs have argued that an employer must affirmatively ensure that their employees take the required meal periods, while defendants claim that the employer’s duty is only to provide the employee the opportunity to take the meal period free of any control by the employer.  After much legal wrangling, most of the case rests on the Court’s interpretation of the Labor Code, which indicates that the employer is to “provide” a meal period.

During oral arguments, the plaintiff argued that under the “ensure” standard, employers would be justified in disciplining or even firing employees who did not follow instructions on taking their meal breaks.  The Court seemed hesitant to adopt a standard that could lead to this outcome and appeared to favor a standard that provided flexibility, leaving the choice up to the employee as to whether or when they would take their meal break.

The most insightful comment from the bench on this issue pointed out that, if the hallmark of a meal period is the employer suspending control over the employee, then the employee should be able to choose for themself whether to take the meal period at the designated time.  Overall, the tenor of the questions suggested that the Court is in favor of a standard that leaves the employee some flexibility in deciding whether to take their meal breaks.

In a relatively rare circumstance, the California Supreme Court accepted a post-argument brief concerning the “rolling 5″ issue – whether meal periods must be provided for every 5 consecutive hours of work, e.g., in an 8-hour shift, if an employee takes a meal period after 3 hours, then works a further 5 hours after the meal period, must a second meal period be provided.  Also, the brief addresses whether the Court’s decision will apply prospectively or retroactively.  If applied retroactively, the statute of limitations for meal period violations is 3 years, but challenges could also be filed under California’s unfair competition law, which has a 4-year statute of limitations.

The California Supreme Court is required by court rule to issue decisions 90 days after they are submitted.  The Court previously submitted the Brinker case for decision after the November 8 oral argument, which is why most expected the final ruling by early February 2012.  On December 14, the California Supreme Court vacated the November 8 submission of the matter based on its earlier decision to allow further briefing on the issue of whether the eventual decision will operate prospectively or retroactively.  The Court has now ruled that additional briefing will be completed by January 13, 2012, and the matter submitted at that time.  As a result, the Court should issue its decision by April 12, assuming no additional delays.

Recognizing the potential for significant liability exposure at the employer level, check with your insurance broker to determine if you have coverage.  And, by all means, institute a rationale and effective asset protection structure at the company level in case a catastrophic lawsuit besets your company.

Many taxpayers or their CPAs, who are already filing the FBAR return, may not realize they may also be required to file this Form 8938.

This blog post is intended to briefly describe the eligibility requirements and to recommend that you contact your CPA or tax compliance professional for further information, as failure to file the report carries significant penalties.  Quoting from the IRS’ website

“Do I need to file Form 8938, Statement of Specified Foreign Financial Assets?

Certain U.S. taxpayers holding specified foreign financial assets with an aggregate value exceeding $50,000 will report information about those assets on new Form 8938, which must be attached to the taxpayer’s annual income tax return.  Higher asset thresholds apply to U.S. taxpayers who file a joint tax return or who reside abroad (see below).

Form 8938 reporting applies for specified foreign financial assets in which the taxpayer has an interest in taxable years starting after March 18, 2010.  For most individual taxpayers, this means they will start filing Form 8938 with their 2011 income tax return to be filed this coming tax filing season.

Upon issuance of regulations, FATCA may require reporting by specified domestic entities.  For now, only specified individuals are required to file Form 8938.

If you do not have to file an income tax return for the tax year, you do not need to file Form 8938, even if the value of your specified foreign assets is more than the appropriate reporting threshold.  If you are required to file Form 8938, you do not have to report financial accounts maintained by:

• a U.S. payer (such as a U.S. domestic financial institution),
• the foreign branch of a U.S. financial institution, or
• the U.S. branch of a foreign financial institution.

Refer to Form 8938 instructions for more information on assets that do not have to be reported.

You must file Form 8938 if:

1. You are a specified individual.

A specified individual is:

• A U.S. citizen
• A resident alien of the United States for any part of the tax year (see Pub. 519 for more information)
• A nonresident alien who makes an election to be treated as resident alien for purposes of filing a joint income tax return
• A nonresident alien who is a bona fide resident of American Samoa or Puerto Rico (See Pub. 570 for definition of a bona fide resident)

AND

2. You have an interest in specified foreign financial assets required to be reported.

A specified foreign financial asset is:

• Any financial account maintained by a foreign financial institution, except as indicated above
• Other foreign financial assets held for investment that are not in an account maintained by a U.S. or foreign financial institution, namely:
• Stock or securities issued by someone other than a U.S. person
• Any interest in a foreign entity, and
• Any financial instrument or contract that has an issuer or counterparty that is other than a U.S. person.

Refer to the Form 8938 instructions for more information on the definition of a specified foreign financial asset and when you have an interest in such an asset.

AND

3. The aggregate value of your specified foreign financial assets is more than the reporting thresholds that applies to you:

• Unmarried taxpayers living in the U.S.: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year
• Married taxpayers filing a joint income tax return and living in the U.S.: The total value of your specified foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year
• Married taxpayers filing separate income tax returns and living in the U.S.: The total value of your specified foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year
• Taxpayers living abroad.  You are a taxpayer living abroad if:

You are a U.S. citizen whose tax home is in a foreign country and you are either a bona fide resident of a foreign country or countries for an uninterrupted period that includes the entire tax year, or

You are a U.S. citizen or resident, who during a period of 12 consecutive months ending in the tax year is physically present in a foreign country or countries at least 330 days.

If you are a taxpayer living abroad you must file if:

You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or

You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

Refer to the Form 8938 instructions for information on how to determine the total value of your specified foreign financial assets.

Reporting specified foreign financial assets on other forms filed with the IRS.

If you are required to file a Form 8938 and you have a specified foreign financial asset reported on Form 3520, Form 3520-A, Form 5471, Form 8621, Form 8865, or Form 8891, you do not need to report the asset on Form 8938.  However, you must identify on Part IV of your Form 8938 which and how many of these forms report the specified foreign financial assets.

Even if a specified foreign financial asset is reported on a form listed above, you must still include the value of the asset in determining whether the aggregate value of your specified foreign financial assets is more than the reporting threshold that applies to you.”

Conclusion:  All taxpayers are presumed to know the law, no matter how confusing or obtuse.  If you have any questions or concerns as to whether this new reporting requirement applies to your transactions, call your tax accountant or us and we will try to help you sort this all out.