Form 8838 for Crypto Held on Foreign Exchange (KuCoin)

[RossAngelos]

I have a work Visa and live in the US. From what I understand I'm considered a US resident and have to file my 2020 taxes here. 

I have crypto on Foreign Exchange  - KuCoin. Mostly I'm using that to hold crypto, however I have a little trades that resulted in about $1000 gain. 

When I'm using turbotax it's asking me to file an 8838 form as I meet the minimum 75k threshold.

That form seems to be pretty straightforward, the only thing I don't understand is this step: "Amounts Related to Foreign Financial Assets" .

That page has two options: 

1. "Amounts Attributable to Foreign Financial Accounts", Where I can type: Interest, Dividends, Gains/Losses, Royalties etc.

2.  And "Amounts Attributable to Other Foreign Financial Assets" (Interest, Dividends, Gains/Losses, Royalties)

I have no idea what the difference is. Both fields have the same information. 

Where do I put my gains? Under "Amounts Attributable to Foreign Financial Accounts" or "Amounts Attributable to Other Foreign Financial Assets"?

 I'm aware that I have to file a separate form with capital/gains and FBAR, however I'm asking specifically for this form.

The other thing I was wondering about this checkbox on the next page "This account did not have income, deductions, or credits associated with it in 2021" :

Just to make sure I understand it correctly, by "Income", do they mean Capital Gains? So I don't have to check that checkbox. 

Also the very next checkbox says ".. held in foreign currency". Ok, so how to be here? Like it's crypto and by the IRS it's defined as property, so I don't have to check that box as well? 

Appreciate any advice!

Thanks!

[MaryK4]

Foreign Financial Accounts are accounts maintained by a foreign financial institution (like a bank).  Other Foreign Financial Assets are held for investment and not held in an account maintained by a financial institution- this includes those issued by someone who is not a U.S. person, any other interest in a foreign entity, and any financial instrument or contract held for investment with an issuer or counterpart that is not a U.S. person.  Kucoin is a non-U.S. exchange so it would be the asset category.  (See Instructions for Form 8938.)

You are correct that the capital gain is the income so you should not check that box.  The foreign currency is specific to "authorized medium of circulation" of a country so cryptocurrency does not apply.

[RossAngelos]

Thanks for the reply. I went through your link and it makes sense now. 

As I understand, Foreign Crypto accounts do not currently qualify as foreign financial accounts but crypto held on such exchanges qualify as foreign financial assets under FATCA. 

That's actually pretty interesting as based on this assumption, for 2021 year it appears no FBAR filing is required and only 8938 form. 

Also, it appears I was doing wrong in Turbotax. When I selected "I don't have foreign account" but I also selected "I have Other Foreign Financial Asset", it gave me completely different form: