What is the difference between Form 8938 Part V and Part VI?

Part V is for foreign deposit and custodial accounts, meaning bank accounts and broker or platform accounts maintained by a foreign financial institution. Part VI is for other foreign assets, which the Instructions for Form 8938 describe as financial accounts other than deposit and custodial accounts together with specified foreign financial assets not held in a financial account at all. Directly registered shares, an interest in a UK company, a loan note issued by a UK borrower and a derivative contract with a non US counterparty are Part VI items. The governing principle is one asset, one place: an asset reported through its account in Part V is never listed again in Part VI.

Do I report the individual shares held inside my UK investment platform in Part VI?

No. The Instructions for Form 8938 state that if you have an interest in a financial account that holds specified foreign financial assets, you do not have to report the assets held in the account. The IRS Basic questions and answers on Form 8938 page confirms the same rule from the other direction, saying that if you hold foreign stock or securities inside of a financial account you do not report the stock or securities on Form 8938. The platform account is a single Part V entry. Listing its underlying holdings in Part VI as well double counts them and produces a Part II summary that cannot be reconciled to your statements.

Are shares in my own UK private limited company reportable on Form 8938?

Yes, as an interest in a foreign entity, and they belong in Part VI unless you have already reported the interest on a timely filed Form 5471 or Form 8865, in which case the instructions let you report the number of such forms in Part IV instead of repeating the detail. Being an active trading company does not remove the shareholding from the reporting net, because the instructions state expressly that stock is not considered used or held for use in the conduct of a trade or business. Note also that even where the asset is excepted into Part IV, its value still counts toward your reporting threshold as a specified individual.

How do I value a private UK shareholding for Form 8938 when there is no market price?

You report the maximum value during the tax year, and for a non-account asset the instructions direct you to use the value as of the last day of the tax year unless you know or have reason to know it does not reflect a reasonable estimate of the maximum value during the year. The IRS Basic questions and answers page confirms you do not need a third party appraisal to make that estimate. In practice, statutory accounts filed at Companies House, an actual share transaction price during the year, a funding round price or the valuation formula in the shareholders agreement all give defensible figures. Determine the value in sterling first, then convert using the U.S. Treasury Bureau of the Fiscal Service rate as at the last day of the tax year.

Is a loan I made to a UK business reportable on Form 8938?

Yes. A note, bond or debenture issued by a person who is not a U.S. person, held for investment and not held inside a financial account, is a specified foreign financial asset and is reported in Part VI. The exception is where you are in the business of lending money, in which case the loan is used in a trade or business and fails the held for investment test. Your Part VI entry needs the borrower's name, whether it is a corporation or another type of entity, whether it is US based or foreign based, its full mailing address and country, and the maximum value during the year, which for most loans is outstanding principal plus accrued but unpaid interest.

Missed Reporting an Investment Account: Form 8938 Part VI

Q: I filed Form 8938 on time but left Part VI blank. Is that year still open?

Very possibly. The Instructions for Form 8938 state that if you fail to file Form 8938 or fail to report a specified foreign financial asset, the statute of limitations for the tax year may remain open for all or a part of your income tax return until three years after the date on which you file Form 8938. A return with a blank Part VI is a return on which a specified foreign financial asset was not reported, so the assessment clock on that year has not run in the normal way, and filing the corrected form is what starts it. Where the failure was due to reasonable cause and not willful neglect the extension is limited to the items connected with the failure, which is why the correction and its supporting documentation should be prepared together.

If you have missed reporting investment account assets on Form 8938, the correction usually belongs in Part VI rather than Part V. Form 8938 has two detail parts. Part V is for foreign deposit and custodial accounts. Part VI is for other foreign assets, which the Instructions for Form 8938 define as specified foreign financial assets not held in an account maintained by a financial institution. For wealthy Americans living in the United Kingdom, Part VI is the part most often left blank when it should have been completed, because the assets it captures never generate a platform statement or a year end tax pack.

That is the whole difficulty. A UK platform sends a consolidated tax certificate every spring and the account duly gets reported. A share certificate in a drawer, a founder holding recorded only on a company register, a loan advanced on a short facility letter, and a loan note taken as consideration on a sale produce nothing that looks like a financial statement. Nothing arrives to prompt the entry, so nothing is entered. In our tax preparation and compliance work with UK resident American investors, bankers and business owners, a blank Part VI is among the most common defects we find on taking over a file.

What does Form 8938 Part VI actually cover?

The Instructions for Form 8938 divide specified foreign financial assets into two families. The first is financial accounts maintained by a foreign financial institution, including depository and custodial accounts and an equity or debt interest in a foreign financial institution. The second, which the instructions call other specified foreign financial assets, covers stock or securities issued by someone that is not a U.S. person, any interest in a foreign entity, and any financial instrument or contract that has an issuer or counterparty that is not a U.S. person, in each case where the asset is held for investment and is not held in an account maintained by a financial institution.

Part V carries the detail for foreign deposit and custodial accounts. Part VI carries everything else, described in the instructions as financial accounts other than deposit and custodial accounts together with other specified foreign financial assets not held in a financial account. Note how narrow the held for investment test is. The instructions say you hold an asset for investment if you do not use it, or hold it for use, in the conduct of any trade or business, and they state expressly that stock is not considered used or held for use in the conduct of a trade or business. A founder cannot therefore treat a shareholding in an active operating company as a business asset in order to keep it off Part VI.

Which UK assets belong in Part VI, and which never do?

The recurring Part VI population for a UK resident American is narrow but valuable. These items surface repeatedly once you map ownership rather than gather statements.

Shares or securities issued by a UK person and held directly rather than through a broker or platform, including certificated holdings and holdings on a company register through a registrar or a personal CREST membership.
An interest in a UK company or other non US entity: a private limited company you founded, a minority stake in someone else's business, or an interest in a UK partnership or limited liability partnership.
Notes, bonds and debentures issued by a UK person and held outside an account, including loan notes taken as consideration on a sale and convertible instruments issued by a private company.
A loan you have made to a UK person or business, where the promissory note or facility agreement is itself the asset, unless you are in the business of lending money.
Financial instruments and contractual interests held for investment with a non US issuer or counterparty, such as an option, a swap or a forward.
An interest in a UK pooled vehicle held directly with the manager rather than through a platform, including hedge fund and private equity style interests, which the IRS Comparison of Form 8938 and FBAR requirements page confirms are reportable on Form 8938.

Just as important is what never reaches Part VI. The IRS Basic questions and answers on Form 8938 page states that foreign real property is not a specified foreign financial asset required to be reported on Form 8938, that directly held tangible assets such as art, antiques, jewelry, cars and other collectibles are not specified foreign financial assets, that directly held precious metals such as gold are not, and that foreign currency itself is not reportable. The same page confirms a safe deposit box is not a financial account.

A London flat or a country house owned directly in your own name, however valuable. The rental profit is still reported on your return; the property itself is not a Form 8938 asset.
Gold bullion, art, classic cars, fine wine and jewellery held directly rather than through an entity.
Foreign currency held as currency, including sterling balances outside a financial account.
The contents of a UK safe deposit box, because the box is not a financial account.
The individual shares, funds and bonds inside a UK platform, nominee or custodial account, because the account itself is the reportable asset.

Have you missed reporting investment account holdings that were never in an account?

This is where the two halves of the problem meet. The instructions are unambiguous: if you have an interest in a financial account that holds specified foreign financial assets, you do not have to report the assets held in the account. The Basic questions and answers page puts the same rule from the other side, stating that if you hold foreign stock or securities inside of a financial account you do not report the stock or securities on Form 8938, and that foreign stock or securities held outside of a financial account must be reported once your total specified foreign financial assets exceed the threshold that applies to you.

The practical rule is one asset, one place. If a UK platform holds your equity portfolio through its nominee, the account is a single Part V entry and the underlying holdings are invisible to Part VI. If you also hold 30,000 shares in a UK listed company registered in your own name with the company's registrar, that holding sits inside no account and is a separate Part VI entry. Filers who list the platform's underlying holdings in Part VI as well as the account in Part V double count, inflate the Part II summary, and produce totals that cannot be reconciled to the statements. Filers who assume the platform account covers everything leave the registered holding, the company stake and the loan note off the return entirely. The second error is far more serious, because it omits an asset rather than merely misplacing one, and only it opens the door discussed later in this article.

What information does each Part VI entry demand?

Part VI is not a one line disclosure. The instructions run each other foreign asset through a block of lines, numbered 29 to 36 in the current instructions, and every line needs an answer.

A description specific enough to identify the asset, such as ordinary shares in a named UK company or a secured loan note issued by a named UK borrower.
An identifying number or other designation, which for a private holding may be a share certificate number, a registrar account reference or the note's serial number rather than an ISIN.
The date the asset was acquired during the tax year, and the date it was disposed of, wherever either applies.
Whether the asset is jointly owned with your spouse, and whether no income, gain, loss, deduction or credit was reported for the asset anywhere on your return.
The maximum value during the tax year, the foreign currency in which that value was determined, and the exchange rate and its source if you did not use the Treasury rate.
The name of the issuer or counterparty, whether that person is the issuer or the counterparty, whether it is a corporation, a partnership or another type of entity, whether it is US based or foreign based, and its full mailing address including country.

Two lines deserve particular attention because they are where private holdings stall. The identifying number line has no answer if you are hunting for a market identifier, and the answer is simply that a certificate number or registrar reference is a perfectly good designation. The no tax item line is the one that catches founders: a UK private company that has never declared a dividend produces no income entry anywhere on the return, and that is precisely when the box is ticked rather than the asset dropped. An asset that produced nothing is still a Part VI asset.

How do you value a Part VI asset with no statement and no quoted price?

The general rule is fair market value, and you must report the maximum value during the tax year of each specified foreign financial asset. For an account you may rely on periodic account statements for the tax year. A directly held private shareholding or a loan note produces neither a statement nor a quoted price, and the instructions supply the fallback: use the value as of the last day of the tax year unless you know or have reason to know, based on readily accessible information, that it does not reflect a reasonable estimate of the maximum value during the year.

The Basic questions and answers page then removes the objection most filers raise, confirming you do not need to obtain an appraisal by a third party in order to reasonably estimate the asset's maximum value during the tax year. In practice a defensible estimate for a private UK company shareholding is built from statutory accounts filed at Companies House, the price of a share transaction that actually occurred during the year, a funding round price, or the valuation formula in the shareholders agreement. For a loan, outstanding principal plus accrued but unpaid interest at the year end is normally the reasonable figure. What matters is that the method is written down contemporaneously and applied consistently, because inconsistency between catch-up years is far more visible to an examiner than a conservative estimate.

Currency must then be handled in the right order, which trips up filers who compute in dollars from the start. The instructions require the maximum value to be determined in the foreign currency first and then converted into U.S. dollars, using the U.S. Treasury Bureau of the Fiscal Service foreign currency exchange rate for purchasing U.S. dollars, applied as at the last day of the tax year even where the asset was disposed of earlier. If no Treasury rate is available you may use another publicly available rate and must disclose it. Finally, if the maximum value is less than zero, the instructions direct you to use a value of zero rather than leaving the line blank.

Worked example: four UK holdings, three different outcomes

The following uses invented figures for a composite client and illustrates how the parts divide. Marcus is a US citizen who has lived in London for eleven years, files as unmarried, and holds the following.

A UK investment platform account holding a diversified portfolio of UK and global equities and funds, maximum value 1,180,000 dollars. A custodial account and a single Part V entry. Not one underlying holding is listed in Part VI.
A UK current account for salary and household spending, maximum value 48,000 dollars. A deposit account, so a second Part V entry.
40,000 shares in a UK listed company held in his own name on the register through the company's registrar, never inside a broker account, maximum value 310,000 dollars. Inside no account, so a Part VI entry with the registrar reference as the identifying number.
A 62 percent shareholding in the UK private limited company he founded, self computed maximum value 640,000 dollars from the statutory accounts and a small secondary transfer during the year. An interest in a foreign entity, so a Part VI entry, with the no tax item box ticked because no dividend was paid.
A 150,000 pound secured loan advanced to an unrelated UK trading business, converted at the year end Treasury rate to 195,000 dollars including accrued interest. A note issued by a non US person held outside an account, so a Part VI entry.
A let flat in Clapham owned directly, worth more than any single item above. Not a specified foreign financial asset and not reported on Form 8938 at all, although the rental profit is reported on his return in the ordinary way.

Marcus's Part V entries total 1,228,000 dollars and his Part VI entries total 1,145,000 dollars, giving aggregate specified foreign financial assets of 2,373,000 dollars. He is comfortably above the thresholds the IRS Comparison of Form 8938 and FBAR requirements page sets for a specified individual living outside the United States, which for an unmarried filer are more than 200,000 dollars on the last day of the tax year or more than 300,000 dollars at any time during the year.

For three years Marcus filed a Form 8938 showing only the two Part V accounts, with Part VI blank. Just under half of his reportable asset value, 1,145,000 dollars of it, never appeared on the form. In one of those years a previous preparer went the other way and listed eleven individual equity holdings from inside the platform in Part VI, double counting 1,180,000 dollars and producing a Part II summary that tied to nothing. Both years need correcting, but only one involves an omitted asset.

One refinement applies to the founder holding. If Marcus reports his interest in the UK company on a timely filed Form 5471, the instructions allow him not to repeat the asset in Part VI, and instead to report the number of such forms in Part IV of Form 8938. That is an exception from duplicative detail, not from counting: the instructions require a specified individual to include the value of all specified foreign financial assets, even those reported on another form, when testing whether the threshold has been met.

Do Part VI assets count toward the reporting threshold?

Yes, and this is the trap in years when a filer concludes no form is due at all. The threshold test applies to the total value of all specified foreign financial assets, and Part VI assets are specified foreign financial assets. A UK resident American whose platform account sits at 180,000 dollars may decide nothing is required, when a directly held company stake and a loan note push the true total well past the figures on the IRS Comparison of Form 8938 and FBAR requirements page. A year with no form at all can be just as defective as a year with a blank Part VI, and for the same reason.

Does the FBAR have anything equivalent to Part VI?

No. FinCEN Form 114 reports foreign financial accounts once aggregate value exceeds 10,000 dollars at any time during the calendar year, and it has no concept of a non account asset. The IRS Comparison of Form 8938 and FBAR requirements page answers this directly: foreign stock or securities not held in a financial account is Yes for Form 8938 and No for the FBAR, and foreign hedge funds and private equity funds are likewise Yes and No. Every asset discussed here is invisible to your FBAR, which is why a filer with a spotless FBAR history can still hold a materially incomplete Form 8938 record.

How do you correct a missed Part VI across catch-up years?

There is no standalone late Form 8938. The form lives on the income tax return, so a corrected Part VI travels on a corrected return. For a year already filed that means Form 1040-X with a complete Form 8938 attached, showing every Part V and Part VI entry for that year rather than only the newly added ones. Consistency across catch-up years matters more than filers expect: acquisition and disposal dates, identifying numbers and valuation method should knit into a coherent history of each asset, because an examiner reading three amended returns side by side reads them as one narrative.

Where the omission also carried unreported income, or the record runs back further than a year or two, the Streamlined Filing Compliance Procedures are usually the right vehicle. The IRS page for U.S. taxpayers residing outside the United States sets the shape of a Streamlined Foreign Offshore submission: delinquent or amended returns for each of the most recent three years for which the return due date has passed, delinquent FBARs for each of the most recent six years for which the FBAR due date has passed, and a Form 14653 certification that the failure was due to non willful conduct, which the IRS defines as conduct due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law. Critically here, the IRS states that the amended returns are filed together with the required information returns, giving Forms 3520, 5471 and 8938 as its examples, even if those returns would normally be filed separately. The same page confirms a compliant submission will not be subject to failure to file and failure to pay penalties, accuracy related penalties, information return penalties or FBAR penalties.

Outside a streamlined submission the exposure is set out in the instructions: a 10,000 dollar failure to file penalty, an additional 10,000 dollars for each 30 day period of continued failure after IRS notification up to a maximum of 50,000 dollars, and a 40 percent accuracy related penalty on an understatement of tax attributable to an undisclosed asset. A reasonable cause exception applies where the failure was due to reasonable cause and not to willful neglect, a position best documented when you correct rather than assembled after a notice lands.

What does section 6501(c)(8) do to a return with an incomplete Form 8938?

This changes the urgency of the whole exercise, and it bites on an incomplete form, not only a missing one. The Instructions for Form 8938 state that if you fail to file Form 8938 or fail to report a specified foreign financial asset, the statute of limitations for the tax year may remain open for all or a part of your income tax return until three years after the date on which you file Form 8938. A return with a blank Part VI is a return on which a specified foreign financial asset was not reported. The assessment period on that year does not run in the ordinary way. It waits.

The consequence is uncomfortable for anyone assuming an old year has closed. A return filed on time several years ago with a complete Part V and a blank Part VI can still be open today, because the clock on the omitted asset never started, and filing the corrected Form 8938 is what starts it. The words all or a part matter too: where the failure is due to reasonable cause and not willful neglect, the extension is confined to the items connected with the failure rather than reopening the whole return, which is a further reason to build that position properly at the point of correction.

A second timing rule runs alongside it. The instructions state that if you do not include in gross income an amount relating to one or more specified foreign financial assets, and the amount omitted is more than 5,000 dollars, any tax you owe for that year can be assessed at any time within six years. Dividends on a directly held UK shareholding and interest on a loan note are exactly the income that goes unreported alongside the asset itself, so in practice the two rules often apply to the same year.

What this means for your next filing season

Part VI rewards a different kind of preparation from Part V. Part V is a document gathering exercise, driven by what institutions send you. Part VI is an ownership mapping exercise, and it begins from the opposite question: what do you own that no institution holds for you? Every share certificate, every entry on a company register, every loan you have made, every note taken as consideration, every contract with a non US counterparty. Build that schedule once, attach a written valuation method to each line, and Part VI becomes maintenance rather than an annual scramble.

If your Form 8938 history contains a blank Part VI, the position is correctable and the correction is routine work. Our US tax return preparation service for Americans in the UK, our streamlined filing compliance service and our foreign asset reporting compliance work exist for exactly this situation. The sequence is to map the assets, value them on a documented basis, decide whether an amended return or a streamlined submission is the right route, and file. Doing that voluntarily, before the IRS raises the question, preserves both the reasonable cause position and the ability to close the years section 6501(c)(8) is currently holding open.