What maximum value of account to show on Form 8938 when also filing Form 3520?

[JohnUK]

Hi,

I file Form 8938 (& FBAR) each year for foreign financial assets which includes a couple of bank deposit accounts.

For 2023 I will also need to file Form 3520 for foreign inheritance consisting of residential real estate and cash. The cash ($80k) was deposited in to one of my existing foreign bank accounts that is reported on 8938.

I'm confused as to what maximum value I should show on 8938 for that account. If I include the cash from 3520 that was deposited in to it the account max would be $110k, without it the account had $30k.  I'm trying to work out what to do :

a) Should I indicate 1 Form 3520 in Part IV (line 15) on Form 8938, check box C on Form 3520 and then show a max account value of only $30k? It feels wrong to report a max value that is less than the actual.

b) Or should I not indicate any Form 3520 in Part IV (line 15) on Form 8938, not check box C on Form 3520 and then show the max account value of $110k in 8938 ? I will still file 3520.

c) Or option a) but showing a max value of $110k for the account on Form 8938?

Thanks very much for any help, I'm pulling my hair out trying to finish this.

[SusanY1]

If you made the deposit before year end 2023, you should report the high balance on 8938 (and FBAR/FinCEN) with the deposit, even though that same asset will be reported on 3520.  

There are many cases when the same funds are somewhat double counted on these reports due to moving funds around. That is perfectly acceptable, and even expected.  

For example, if I have $50,000 in my savings account and move it to my checking account and it causes a new high watermark in that account, I am going to have to report that same $50,000 in both accounts.  However, the IRS and FinCEN aren't really looking to add these up and determine your total net worth - they are looking for a host of other things (most of which they won't share with us!)  

So, of your options, it seems "C" fits the best. You will report the actual high balance on your 8938 and then on 3520 you report the value of the funds that were acquired through your inheritance.