Is a Kinesis account considered a foreign bank account that US residents need to fill out a FBAR for disclosing assets? I'm reading conflicting things and yes I will be talking to my accountant this year about it but I'm wanting to educate myself ahead of time.
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US Residents: need to report to IRS as foreign bank account?
- Thread starter packeroni
- Start date
I think it is, but I'd love to hear what your accountant says about it. The question is pertinent especially now because we do not have individual accounts. So I would like to know what exactly constitutes an account that is FBAR-disclosable. It's pertinent for me for other reasons as well, so please post here what you find out.
And the thing is, for wiring deposits, the beneficiary was to Kinesis USA Inc in early 2023 when TD and Citizens were used. Now it is Allocated Bullion Exchange in Australia. So would deposits in early 2023 to Kinesis USA Inc not be included but in later 2023 to ABE that is included?
Well now you're muddying the waters. I think you should rely on your accountant, he's the professional and should back up his opinion should a dispute arise.
Even Canadians have to disclose foreign property provided the total exceeds CAD$100,000. That includes all the retirees with a home in Florida or Arizona/California.
Seeking help of a professional is good. However, I would caution you and others that CPAs are accountants and tax preparers, not lawyers. The requirements under the FBAR rules of Treasury are not tax rules or accounting rules. In my experience dealing with many professionals in this area, there are many CPAs who know very little about these rules, which begs the question as to why anyone would hire them to give advice in this area. Worse, none of them will know much about Kinesis and KMS. Just be careful about who you look to for advice, and the more you know on your own, the more likely you are to catch any wrong advice that is being given.
And here is a sad fact. Very few CPAs will have any more knowledge of any of the law in this precise area than you do after reading the limited guidance put out by the Treasury and the IRS as the enforcement arm (note: even though this has nothing to do with tax law, the Treasury delegated an enforcement role to the IRS agency, but you're really dealing with the broader Treasury agency). If you read the following, you will know about everything the typical CPA knows.
Line item instructions from Fincen:
So, if your CPA says, "nah, you don't have to report that Kinesis account", are you going to trust him or her?
I'm not trying to discourage anyone from seeking professional help, but are you sure your CPA is up to the task as applied to this topic? It might be wise to try to really understand this yourself, because if you make a mistake here, the penalties are large if you do not report properly. Get up to speed on this so that you can have a good idea whether your CPA is correct, which means you're hiring him or her mostly to hopefully shift blame if something goes wrong. Most CPAs are just going to default to saying "report everything", because why would they take a risk when it is easy to just report? But what is "everything" in the case of Kinesis? In my opinion, there is no substitute for taking some ownership here as part of the cost of being involved with Kinesis. Use your CPA to file, if you want, but don't just think you can delegate away all responsibility, because if he makes a mistake, he will find a way to blame it on you and your lack of communication as to what you had.
Take a look at page 4 of the PDF of the first link above. Think about what could be considered to be an "account" under the KMS system given these rules. The KMS account with your KMS #? Sure seems so, right? Do you mint and have a separate mint account? That probably counts too as a separate reportable account.
You have to consider the highwater mark in these "accounts" for testing in the aggregate. See my comments below for why coming up with this data sucks currently under the KMS interface.
What if you just hold crypto and never held any USD or other foreign currency in the account? Read page 4 carefully as to what they say about "crypto". If you think this exception applies, perhaps talk this over carefully with your professional, as there are many variations to facts here, seeing as you could be holding reportable assets in addition to crypto. Is the crypto value included in the total value with other reportable assets? And what about KAU? Is it crypto or like gold bullion? Fincen considers a custodial account holding gold bullion to be an "account" for these purposes. What if you held over $10K worth of KAU but nothing else. Is it reportable? Does the average CPA know the answer to that any more than you do? (Hint: probably not, because he's reading the same things you're reading - because he's not a lawyer digging into Treasury law, or the little of it that even exists for this topic). The average CPA is just going to tell you to report assuming all of the assets are included in the total highwater mark. This isn't necessarily bad advice, but it does beg the question as to what you are paying for if the answer is to just report everything.
Where does this lead for most of us with total accounts exceeding the $10K highwater mark (in the aggregate for all foreign accounts)? For most, the answer is easy as to reporting both the KMS account and the mint account (if you have a mint account) because it would be rare that a Kinesis user would have only held crypto and nothing else. Report them both. If your CPA tells you something else, then press him on exactly why he says that. What is he assuming as to the meaning of "crypto" or KAU, etc.?
You raise an interesting point that you sent funds to a U.S. based account when TD or Citizens were working. Those were not your accounts. So, you have to assume those funds were moved to the foreign accounts held by Kinesis through which they credited your KMS account, which appears to be held in non-U.S. banks. Thus: reportable balances in a foreign account with Kinesis.
What about if you move KAU or KAG to a private wallet address where you control the keys. Is that private address an "account", and is it "foreign". Arguably that's not an "account" under the current rules (see page 4 of the PDF in the first link above - even though Treasury has been considering changing the rules on this), but it's hard to know how they would classify KAU, which some might say is an excludable "crypto" while others might say it is a bullion receipt with a foreign custodian and is not excludable. If it is the latter, does moving it to a private wallet address take it out of the reporting requirement? Who knows? One could argue that the location of the receipt is irrelevant (just like holding a paper receipt in your own hand) if the custodied bullion is held in a foreign account. But unlike a typical bailment account, you can hold KAU in a self-custodied account and not even have a KMS account. What would you even use for an account number? I can guarantee your CPA doesn't know these answers either, because basically nobody knows the answer to these unsettled issues. You are going to have to come to some of your own decisions on things like that. I'm not telling you yes or no as to reporting private wallet addresses holding KAU or KAG. Nobody knows at this point.
Lastly, and unfortunately, for many people, most of the time they are going to spend on this has nothing to do with the filing time at Fincen (which doesn't take long) or reading these few rules, especially when just taking the conservative approach and just report the KMS and mint account. The vast majority of time is trying to figure out what your high-water mark was for the year in the KMS account, because (a) Fincen wants to know what that amount was, and (b) because the current Kinesis site interface sucks for giving you this information. The interface doesn't give you monthly statements with assets valued that you can point to. Fincen says a monthly statement is a reasonable approach to valuing highwater marks, but Kinesis doesn't provide that. So, what is one to do? You have to go in and manually run their reports to get the holdings of each asset on periodic dates, say, at month-end. Then you will have to manually determine the USD FMV of each of those assets on that date and then add them all up. I guess you could pay your accountant to take each of those assets and figure out values for them on those dates. That is what accountants are good for, but you still have to spend all of this time running reports - 12 of them at least and then compiling the data. It really does suck not having a monthly statement of account value. [Note: the mint account is easy, because it actually gives you a report of a running total of the mint account value in USD which allows you to easily see the highwater mark.]
This is a gaping hole in the Kinesis interface at present, not having any way to come up with a total account value as of certain dates that you could use for evidential proof and for reporting initially. If you have quite a few different assets, it takes some time to download all of those reports, put them into a spreadsheet and then compute USD values for each asset at that point in time. It sucks, really. It's one reason I've moved my crypto trading elsewhere for now.
Maybe Kinesis Pro will have usable reports for this. But we still have the same issue with regular KMS holding KAU and KAG. There is no easy way to generate a report that gives month-end values in USD of the KAU and KAG holdings. It's all a manual process which is very time consuming, and it sucks. Kinesis needs to do better here on this issue. Hopefully, if it is building a relationship with cointracking, it will be able to offer the ability to generate user account holdings and values in the currency of their choice as to one of the currencies held on KMS. They really need to come up with something like this as a basic service to its users.
You have until October 15, 2024 to get your 2023 FBAR report filed with Fincen. Whether you use a CPA or do it yourself, it's good to get it done early, long before you have to worry about your tax return, so that you don't forget. It's easy to forget and then remember after that extended deadline, and then you have to file late and explain why you filed late. They have a drop down list of reasons, which includes "I forgot". Then you hope that Treasury doesn't come after you and try to impose a penalty which can be steep, even for non-willful late filings. So, don't put it off to the last minute.
Impressive, JH528 ... you're hired!! 
And again, knowing full well to be careful about what I wish for (and the disaster it will be for many), fatca/fbar is one of the major tyrannical IRRITATIONS (aka, PITB!) of the failing hegemon and its parasitical bankster mafia that makes me hope that we might see the demise of it's empire soon, along with its global collection arm (I Rob $laves, Inc). Even if we ourselves won't benefit from its collapse, maybe our kids and grandkids will, once they've survived it (please, Lord). (And of course, that means that I hope and pray that after the collapse we/they would see the re-establishment of a truly representative constitutional republic that creates its own monies backed by Au/Ag.)
And again, knowing full well to be careful about what I wish for (and the disaster it will be for many), fatca/fbar is one of the major tyrannical IRRITATIONS (aka, PITB!) of the failing hegemon and its parasitical bankster mafia that makes me hope that we might see the demise of it's empire soon, along with its global collection arm (I Rob $laves, Inc). Even if we ourselves won't benefit from its collapse, maybe our kids and grandkids will, once they've survived it (please, Lord). (And of course, that means that I hope and pray that after the collapse we/they would see the re-establishment of a truly representative constitutional republic that creates its own monies backed by Au/Ag.)
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Thank so very much for your very thorough and insightful response, I really appreciate it. Definitely trying to do my own due diligence on this and learn as much as I can, this response was helpful in going that direction.
Personally, I file an FBAR for my KMS account. I just list my KM number and total value of all assets held under it, and list Kinesis Cayman as where the account is held. Since I hold KVT on my Ledger and not in a foreign account, I no longer include it on my FBAR. Before KVT were issued, I reported my pre-ITO purchase as an account with Kinesis.
