Simon Black (Do I Have To Report My Offshore Gold…?) asks whether custodial gold “accounts” (e.g., James Turk’s Gold Money) fall under FATCA provisions and his people think so. However, gold kept in a safety deposit box would not fall under FATCA:
What’s more, in all of those 544 pages, there is not a single mention of the words, “gold”, “silver”, or “precious metals”. So there’s still quite a bit of mystery with respect to the question, “Do I have to report my offshore gold…?”
I’m still having my team go through the rules; after an initial read, though, the language of the regulation does suggest that custodial gold institutions (like GoldMoney, etc.) should be reported. Offshore safety deposit boxes (like Das Safe) do not.
This is good news for “structuralists” like myself. In a discussion with Just Me, I learned that my suggestion of opening a few extra accounts to get one’s total over 25 (thus avoiding a detailed FBAR) could be “structuring”. Structuring is the practice of breaking up a single large transactions into multiple transactions below the reporting threshold. See what happened to this Greek American couple: My Big FAT IRS case. A US Person in Canada could withdraw funds from their FATCA covered account, until it is below $50,000, and then buy legal tender gold coins (Maple Leaf). These coins would go into safe storage–meaning it would be safe from burglers and from the snooping noses of the IRS, for such coins would not be reportable under FATCA, FBAR, or Form 8938. But almost certainly, it would be a violation of United States law for you or me to exercise our Canadian freedom to buy legal tender coins minted by the Royal Canadian Mint and legally purchased in a legitimate Canadian business, providing all kinds of jobs to Canadians. You would become a structuralist.
For those readers in Canada, I suggest that you take few seconds and take a deep breath. Breath in that Canadian air. Isn’t that good? That’s because you are breathing freedom–freedom from the tyranny of the United States.
Bear in mind also the ramifications of these legal tender coins for Form 8854. The current retail buy price of the Maple gold (1 oz of super fine gold, purity of 0.9999) is about $1650 (See Canadian PMX in the Toronto Area), but its face value under legal tender laws is $50 CDN. So let me ask the question: when reporting on Form 8854, does one report the legal tender value or the intrinsic value of legal tender coins? If you had ten million US quarters, you would have to report their face value on Form 8854 (US $2.5 million). It would be illegal to report only the intrinsic value of the coins (ca. $500,000). This is because the US quarter is a legal tender coin and its reportable value is what is marked on the coin. So therefore, if you have 6,000 Gold Maple Leaf coins, you would be required to report CDN $300,000 on Form 8854. Accuse me of being a structuralist vis-a-vis United States law. Just do it! But I am obeying the laws of Canada where I live.
There are some people who say that gold is not a good investment, such as the crony capitalist extraordinaire Warren Buffet. Others point to the gold chart and say that this is why gold is a bad investment. Well, I admit that that argument is slightly counter-intuitive.
@p33t, Roger’s exactly right. No you don’t have to do an FBAR/8938 on cash on hand, whether in gold, silver or in worthless fiat currencies. But according to the rules, all cash would be reportable in a net worth calculation that is made in the 8854, and will determine if you are a covered expatriate if that amount exceeds $2 million.
Gold coins would probably be subject to the exit tax if you reported them as such, and the new price was higher than your basis price. But I am suggesting that expats who relinquish don’t always have to be scrupulously accurate in their reporting in Form 8854 and how would they ever know? That is I am encouraging people to stand up to tyranny if they agree with me.
*@Petros, You ask “how would they ever knw?” A pretty good chance they wouldn’t but under the IRS “Squeal on your friends and neighbors program, and reap a massive cash reward” you would want to make very sure nobody else knew your secret. Paper trails are hard to hide from IRS sleuths.
@Roger, Ah, yes, this is the way they took down the Swiss bank accounts. Yet still paper trails in Canada are a black box to the IRS.
*The rules on the Exit Tax are very explicit. It is the market value of your assets the day prior to your renunciation. For gold coins there is no way that market price can be construed as the face value, unless perhaps you are willing to dispose of them at face value.