Instructions For Form 8938 - 2016 (Page 2 of 14) in pdf

Aliens. If you qualify as a resident alien

A domestic trust described in section

described in paragraph (1), (2), or (8) of

under either rule, you are a specified

7701(a)(30)(E) that has one or more

section 1221(a),

individual.

specified persons (a specified individual

The excess of foreign currency gains

or a specified domestic entity) as a

over foreign currency losses (as defined

Special rule for dual resident taxpay

current beneficiary.

in section 988(b)) attributable to any

ers. If you are a dual resident taxpayer

section 988 transaction, and

(within the meaning of Treasury

Closely held domestic corporation.

Net income from notional principal

Regulations section 301.7701(b)-7(a)

A domestic corporation is closely held if,

contracts.

(1)), who determines his or her income

on the last day of the corporation’s

tax liability for all or a portion of the

taxable year, a specified individual

Exception from passive income

taxable year as if he or she were a

directly, indirectly, or constructively

treatment for dealers. In the case of a

nonresident alien as provided by

owns at least 80 percent of the total

domestic corporation or partnership

Treasury Regulations section

combined voting power of all classes of

regularly acting as a dealer in property

301.7701(b)-7, file Form 8938 as

stock of the corporation entitled to vote

described in Regulations section

follows:

or at least 80 percent of the total value

1.6038D-6(b)(3)(i)(F), forward

of the stock of the corporation.

contracts, options contracts, or similar

Specified individual filing as a

financial instruments (including notional

Closely held domestic partnership.

nonresident alien at the end of his or

principal contracts and all instruments

A domestic partnership is closely held if,

her taxable year. You are not

referenced to commodities) passive

on the last day of the partnership’s

required to report specified foreign

income does not include the following:

taxable year, a specified individual

financial assets on Form 8938 for the

1. Any item of income or gain (other

directly, indirectly, or constructively

portion of your taxable year covered by

than any dividends or interest) from any

holds at least 80 percent of the capital

Form 1040NR or Form 1040NR-EZ,

transaction (including hedging

or profits interest in the partnership.

provided you comply with the filing

transactions and transactions involving

requirements of Treasury Regulations

Constructive ownership. Sections

physical settlement) entered into in the

section 301.7701(b)-7(b) and (c),

267(c) and (e)(3) apply for purposes of

ordinary course of such dealer’s trade or

including the requirement to timely file

determining a specified individual’s

business as such a dealer.

Form 1040NR or Form 1040NR-EZ, as

constructive ownership in a domestic

applicable, and attach Form 8833.

2. In the case of a corporation or

corporation or partnership, except that

partnership that is a dealer in securities

section 267(c)(4) is applied as if the

Specified individual filing as a

(within the meaning of section 475(c)

family of an individual includes the

resident alien at the end of his or her

(2)), any income from any transaction

spouses of the specified individual’s

taxable year. You are not required to

entered into in the ordinary course of the

family members.

report specified foreign financial assets

corporation’s or partnership’s trade or

on Form 8938 for the portion of your

Passive income. Passive income

business as a dealer in securities.

taxable year reflected on the schedule

means the portion of gross income that

to Form 1040 or the schedule to Form

consists of:

Passive income or assets of related

1040EZ, as applicable, required by

Dividends, including substitute

corporations and partnerships. For

Treasury Regulations section

dividends,

purposes of determining whether a

1.6012-1(b)(ii)(a), provided you comply

Interest,

domestic corporation or partnership

with the filing requirements of Treasury

Income equivalent to interest,

meets the passive income or asset test,

Regulations section 1.6012-1(b)(2)(ii)

including substitute interest,

domestic corporations and domestic

(a), including the requirement to timely

Rents and royalties, other than rents

partnerships that are closely held by the

file Form 1040 or Form 1040EZ and

and royalties derived in the active

same specified individual and that are

attach a properly completed Form 8833.

conduct of a trade or business

connected through stock or partnership

conducted, at least in part, by

ownership with a common parent

Specified Domestic Entity

employees of the corporation or

corporation or partnership are treated as

partnership,

owning the combined assets and

You are a specified domestic entity if

Annuities,

receiving the combined income of all

you are one of the following.

The excess of gains over losses from

members of that group. For this

A closely held domestic corporation

the sale or exchange of property

purpose, any contract, equity, or debt

that has at least 50 percent of its gross

described in Regulations section

existing between members of the group,

income from passive income.

1.6038D-6(b)(3)(i)(F) and that give rise

as well as any items of gross income

A closely held domestic corporation if

to the types of passive income listed

arising from that contract, equity, or debt

at least 50 percent of its assets produce

above,

is eliminated.

or are held for the production of passive

The excess of gains over losses from

income (see

Passive income

and

Connected stock or partnership

transactions (including futures,

Percentage of passive assets held by a

ownership. A domestic corporation or

forwards, and similar transactions) in

corporation or

partnership., later)

partnership is considered connected

any commodity, but not including,

A closely held domestic partnership

through stock or partnership interest

1. Any commodity hedging

that has at least 50 percent of its gross

ownership with a common parent

transaction described in section 954(c)

income from passive income.

corporation or partnership in the

(5)(A), or

A closely held domestic partnership if

following circumstances.

at least 50 percent of its assets produce

2. Active business gains or losses

1. Stock representing at least 80

or are held for the production of passive

from the sale of commodities, but only if

percent of the total combined voting

income (see

Passive

income, and

substantially all the corporation’s or

power of all classes of stock of the

Percentage of passive assets held by a

partnership’s commodities are property

corporation entitled to vote or of the

corporation or

partnership, later).

value of such corporation, other than

Instructions for Form 8938 (2016)

Instructions For Form 8938 - 2016 Page 2

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