Is Cryptocurrency Reportable on an FBAR?

Many investors have made small fortunes in the virtual currency, aka cryptocurrency, markets. As this type of investment has become more mainstream, investors are now having to deal with tax compliance aspects of investing in cryptocurrency. This article addresses the FBAR reporting requirements for cryptocurrency.

FBAR Implications of Cryptocurrency Investments

A FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR), is required to be filed when the aggregate value of all offshore accounts exceeds $10,000 at any point during the tax year. Is a cryptocurrency investment a “foreign/offshore” account?

Recently, the American Institute of Certified Public Accountants (AICPA) asked this question to the Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN stated that virtual currency held in an offshore account is not a reportable account. This could change in the future as the IRS and FinCEN have been speaking about adding virtual currencies to FBAR reporting. A conservative approach would be to include this investment in your FBAR.

Gains and losses in trading cryptocurrencies are reportable under regular income tax rules. For more information, please contact me at rgarcia@overseastax.com . Please feel free to forward to your friends and colleagues.