Topic: MTGOX Civil Rehabilitation Claim Reportable on FinCEN FBAR and IRS Form 8938??? (Read 95 times)

Just my insight about this one if someone bought the claim and the affected people will be receiving cash for their recovered Bitcoin then it won't be taxable in any circumstance since it is not counted as income. But if you will be receiving Bitcoin directly I think it will still fall under capital gains from which I don't know how it will work since you will only receive the partial amount stolen from you and maybe you forgot what was the market value when you have bought Bitcoin during that time. Maybe just a big maybe they will just set a fixed price during that time before Mt. Gox got hack and your capital gains will be based from there. Again this are just my insights in this scenario and I haven't considered if partial recovered assets are exempted from taxes in the US.

very interesting question.

i believe the claim is not reportable on either form, based on how the IRS defines "financial interest". https://www.irs.gov/pub/irs-utl/IRS_FBAR_Reference_Guide.pdf

basically, it comes down to whether you are the owner of record, holder of legal title, or have signature authority over specific types of foreign accounts. in this case, you are merely a claimant and you have had no receipt of money in, or access to the trust. the account is not yours.

this page details most of the situations where you would have a reportable foreign account: https://www.greenbacktaxservices.com/blog/determining-need-file-fbar-form-8938/

Foreign assets reporting requirements
IRS Form 8938: > $50,000 on the last day of the year or > $75,000 at any time during the year
FinCEN FBAR: > $10,000 at any time during the calendar year

1.  What is the market value of MTGOX Claim? 

I could not easily locate Tokyo Court disclosure to calculate the market value myself.  Michael Hourigan of Fortress Investment Group LLC references that 14% of BTC will be distributed to creditors.  Also, Hourigan offers to buy the claim at discount.  Does either 14% of BTC Claim or Hourigan offer constitute the market cash value?

2.  Is civil rehabilitation claim an asset reportable on FBAR and Form 8938?

According to FinCEN instructions for FBAR https://www.fincen.gov/sites/default/files/shared/FBAR%20Line%20Item%20Filing%20Instructions.pdf :
Financial Account. A financial account includes, but is not limited to, a securities, brokerage,
savings, demand, checking, deposit, time deposit, or other account maintained with a financial
institution (or other person performing the services of a financial institution). A financial
account also includes a commodity futures or options account, an insurance policy with a cash
value (such as a whole life insurance policy), an annuity policy with a cash value, and shares in
a mutual fund or similar pooled fund (i.e., a fund that is available to the general public with a
regular net asset value determination and regular redemptions).

For IRS Form 8938, a foreign asset includes "Any interest in a foreign entity, such as ... foreign estate or trust".

According to sources cited lower, cryptocurrency accounts on foreign exchanges are not reportable on FinCEN FBAR and possible reportable on IRS Form 8938.  However, MTGOX Civil Rehabilitation Claim is not an exchange account; it is a claim in a civil rehabilitation estate.
https://www.jdsupra.com/legalnews/irs-hints-at-form-8938-requirements-for-21273/
https://www.forbes.com/sites/baldwin/2019/07/18/bitcoin-irs-takes-on-the-crooksand-the-good-guys/?sh=5a3f95a14248

Any information would be greatly appreciated.