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docholiday
Returning Member

Do loans to foreign persons, with an agreement, not held in a financial institutions, including a small AFR interest, have to be reported on FINCEN form 8938?

I saw a post that said no by Desauter, and a post that said yes....so I wonder

2 Replies
pk
Level 13
Level 13

Do loans to foreign persons, with an agreement, not held in a financial institutions, including a small AFR interest, have to be reported on FINCEN form 8938?

Loan it self is not a tax event, the earned interest is reportable in the year earned / recieved.  After tax monies  given to a foreign person ( especially  with a track such as bank transfer ) itself is not required to be reported  either on FINCEN 114 or IRS 8938 --- however,  and even though banks  report all suspect activity  to FINCEN, you need to keep good record because if the monies are used  for banned purposes and traced back to you,  it could be a sad story.  At the same people  lend monies to relatives and friends  all the time and across the borders and  things work out OK

docholiday
Returning Member

Do loans to foreign persons, with an agreement, not held in a financial institutions, including a small AFR interest, have to be reported on FINCEN form 8938?

Does it make any difference if the loan was made from overseas to that foreign person?  and also, I read the 8938 instructions on page 6, in two sections I wondered:  "Specified Foreign financial Assets" 2c....I suppose this does not apply because loan agreement is not held in a financial institution?, and "Other specified foreign financial assets" ..."if they are held for investment and not held in a financial account. ....then it says bullet:  a note, bond, debenture or other form of indebtedness ISSUED by a foreign person"...I suppose this does not apply because I am the issuer?, and/or the AFR loan is not held for "investment purposes"?   In this case the loan is issued by me (?), I am lender and they are borrower and it is all overseas. I would think that with all these pages, they would be very clear on a simple mater as a loan to a foreign person!  Any additional thoughts?  Thank for your help!
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