Gold Bullion Reporting – Form 8938 and Form 114 FBAR

Many taxpayers hold physical gold bullions as an investment tool but remain uncertain as to whether foreign physical gold assets are reportable for both Form 8938 Statement of Specified Foreign Financial Assets and Form 114 Report of Foreign Bank and Financial Accounts (“FBAR”) purposes.  The answer is not a simple yes or no.

Form 8938 requires taxpayers who hold specified foreign financial assets to report those assets.  The IRS states that while directly held precious metals, such as gold, are not a specified foreign financial asset, gold certificates issued by a foreign person are specified foreign financial assets and would have to be reported for Form 8938 purposes.  Additionally, if a taxpayer sells precious metals he or she held for investment to a foreign person, the contract with the foreign person to sell assets held for investment is a specified foreign financial assets and must be reported on Form 8938.

The FBAR is a form required to be filed annually with the Department of Treasury through the Financial Crimes Enforcement Network if the taxpayer has a financial interest or signature authority over foreign financial accounts with an aggregate value over $10,000.  Whether a person needs to file an FBAR in regards to gold bullions is a question of fact.  If the gold is held offshore in a simple storage facility, that would not be considered a financial account and therefore would not need to be reported on a FBAR.  However, if the taxpayer has an account with a financial institution that either invests in gold or even hold physical gold for clients for investment purposes, since that is an account maintained by a financial institution, the taxpayer would have to evaluate their position in gold and report it with an FBAR filing if the aggregate value of their foreign financial accounts exceed $10,000.