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FATCA Reporting Requirement for Domestic Entities

FATCA Reporting Requirement for Domestic Entities

IRS has announced about the final regulations of 6038D requiring a “specific domestic entity” to make an annual disclosure of its specific foreign financial assets. This regulation is effective for taxable years beginning after December 31, 2015.

The final regulations extend the Form 8938 reporting requirement to specific domestic entities. A specific domestic entity is defined as a domestic corporation, domestic partnership or a domestic trust “formed or availed” of for purposes of holding (directly or indirectly) specific financial assets.

An entity is “formed or availed” for purpose of this regulation if below two conditions are met:

1. The entity must be closely held – 80% constructive ownership requirement.
2. At least 50 percent of income or assets are passive in nature.

It is anticipated that the IRS will modify current Form 8938 to incorporate entity filers. Please refer to the Regulation section 6038D-6 (attached below) or contact our office for further detail.

6038D Final Reg.pdf

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