Cook & Co. Tax Advisors

2022 Update

Arab, Alabama  

Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS generally using Form 8938, Statement of Specified Foreign Financial Assets. Generally, the reporting requirement applies if at the end of the year your account balance was $50,000 or more. It also applies if your balance exceeded $75,000 at any time during the year.

A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR (FinCEN Report 114) if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year. The FATCA and FBAR rules predate Bit Coin and virtual currencies, however, it is just a matter of time before they will be covered by these reporting requirements.

We filed more than 200 tax returns with Bit Coin transactions.

Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value. In some environments, it operates like “real” currency (i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance), but it does not have legal tender status in the U.S. Cryptocurrency is a type of virtual currency that utilizes cryptography to validate and secure transactions that are digitally recorded on a distributed ledger, such as a blockchain.

Virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency, is referred to as “convertible” virtual currency. Bitcoin is one example of a convertible virtual currency. Bitcoin can be digitally traded between users and can be purchased for, or exchanged into, U.S. dollars, Euros, and other real or virtual currencies.

Tax Consequences

The sale or other exchange of virtual currencies, or the use of virtual currencies to pay for goods or services, or holding virtual currencies as an investment, generally has tax consequences that could result in tax liability.

The Anti-Money Laundering Act of 2020

The Anti-Money Laundering Act of 2020 broadens the definition of “financial institution” under the BSA. The term “financial institution” now includes businesses that exchange or engage in the transmission of cryptocurrency. In addition, FinCEN is required to issue regulations within the next year that determine the scope of persons “engaged in the trade of antiquities” that will be considered “financial institutions” under the BSA.

You don't have to be wealthy to have $10,000 or even $50,000 in your savings account today. And with interest rates on savings accounts ranging from 8% in Europe to 16% in South America, we are finding more and more clients subject to either FATCA or FBAR reporting. Or both!


Greg Cook is an Enrolled Agent, licensed by the U.S. Treasury Department to represent taxpayers before all administrative levels of the Internal Revenue Service (IRS). He is also a Certified Public Accountant licensed by the states of Alabama and Tennessee.