# FBAR Question - Closed Accounts



## the_mighty_tim

Hi all

In the first part of 2014, I had an account with Bank A which subsequently merged with Bank B in the summer. When the merge took place, my account with Bank A was closed and a new one opened with Bank B with all the funds transferred over.

Since both accounts were active in 2014, do I have to report them both on the FBAR form? 

Thanks in advance!


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## Bevdeforges

Given that the Bank B account was nothing more than a continuation of the Bank A account, I'd report the high balance for the year against the Bank B account number. 
Cheers,
Bev


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## BBCWatcher

I can't actually find form instructional support for that point of view, Bev, but perhaps you've found something I haven't?


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## Bevdeforges

They honestly don't give you instructions for every possibility. And in the "odd ball" cases, a good faith approach is usually your best bet. 

I had an account in a British bank that was taken over by an international bank. As far as I'm concerned, I had one account through that entire year - and reported the high balance using the "new" bank name. 

Assuming Bank A doesn't exist anymore (because it was merged with Bank B) it seems kind of pointless to report the no-longer-existant account separately when the account in Bank B is merely a continuation of the same account. (And, I suppose the newly merged bank would be able to track any issues back to the "old" account should the need arise.)

It's similar to advice I've seen elsewhere that says you probably don't have to report multiple accounts in the same bank separately if all the accounts are linked under a "master account" and you report the combined total of all the separate accounts making up the master account.
Cheers,
Bev


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## BBCWatcher

That advice is different advice (multiple accounts at one financial institution under a master account number) because that's what the instructions say to do. But the instructions are chock full of references to separate financial institutions as separately reportable entities.

Does it really matter _who_ transferred the funds between institutions? I'd vote no. Unless you see something in the instructions that clearly says otherwise. I haven't found anything in the instructions that suggest you can underreport in this way.

If we're dishing out this sort of advice, shouldn't we have _something_ in the instructions to hang our hats on here? And what on earth is the "upside" to underreporting on an informational return? Darned if I know.


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## Bevdeforges

If the two banks merged, then they are not separately reportable entities post-merger. Don't see where the problem is.
Cheers,
Bev


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## makaloco

I'd do one of the following:
* Report the highest amounts in Bank A and Bank B separately on the form. If the new form allows space, add for Bank A "Merged with Bank B on [date]" so that they know not to expect you to report Bank A the following year.
* Report only the new account, but as "Bank B (formerly Bank A)".
I never had a bank merger but I did have two accounts that were open part of a year and later closed. On the old FBAR I reported the highest balances but wrote under the account number "closed [date]".


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## Bevdeforges

With the online filing requirement, it is more difficult to put in explanatory remarks than it was with the old paper forms. But see what you can do and what you feel comfortable with.
Cheers,
Bev


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## the_mighty_tim

Thanks for all the responses. Very much appreciated. I just have a couple more points to add:

1. Am I correct in thinking that since I received interest from both Bank A and Bank B during 2014 that I have to report them as separate sources on Schedule B of Form 1040? If so, would that raise a few eyebrows if I only report my Bank B account on my FBAR?

2. I found the following quoted paragraph on the IRS webpages where it talks about the FBAR Willfulness Penalty:



> The following examples illustrate situations in which willfulness may be present:
> 
> A. A person admits knowledge of, and fails to answer, a question concerning signature authority over foreign bank accounts on Schedule B of his income tax return. When asked, the person does not provide a reasonable explanation for failing to answer the Schedule B question and for failing to file the FBAR. A determination that the violation was willful likely would be appropriate in this case.
> 
> B. *A person files the FBAR, but omits one of three foreign bank accounts. The person had closed the omitted account at the time of filing the FBAR. The person explains that the omission was due to unintentional oversight. During the examination, the person provides all information requested with respect to the omitted account. The information provided does not disclose anything suspicious about the account, and the person reported all income associated with the account on his tax return. The willfulness penalty should not apply absent other evidence that may indicate willfulness.*


(Bolded for emphasis, original source: Internal Revenue Manual - 4.26.16 Report of Foreign Bank and Financial Accounts (FBAR))

I interpret this as having to report Bank A and Bank B's accounts, despite the fact that the Bank A account (and Bank A itself) no longer exists. Do you think my interpretation is correct?

Again, many thanks for the responses thus far!


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## StewartPatton

I would report both accounts on the FBAR and list them as separate payors of interest on your Schedule B. I really don't see any reason not to do it this way--it's the most straightforward interpretation of the rules, and there are no potential negative consequences.


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## the_mighty_tim

In the end, I reported both accounts on the FBAR.

Anyway, as of this morning, my tax returns and FBARs have been e-filed, and I can put tax stuff aside for another year.


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