Generating Form 8938, Statement of Specified Foreign Financial Assets, in Lacerte

This article will help to report specified foreign financial assets in Lacerte. Per the IRS, use Form 8938 if the total value of all the specified foreign financial assets in which you have an interest is more than the appropriate reporting threshold. Reporting thresholds vary depending on filing status and whether the taxpayer lives in the United States or abroad; refer to current IRS instructions for details. For additional information, also refer to About Form 8938, Statement of Specified Foreign Financial Assets.

Table of contents:

Form 8938 does not replace FinCEN Form 114 (FBAR). Some specified foreign financial assets must be reported on both forms. Review current IRS and FinCEN guidance to confirm all foreign asset reporting requirements for your client.

The steps for entering Form 8938 information are similar across tax modules. Screen numbers and section names vary by module, but the information requested is generally the same.

Individual Module

Use this module to enter specified foreign financial assets for individual Form 1040 clients so Lacerte can determine whether Form 8938 is required and generate it when applicable.

1. Go to Screen 82, Foreign Reporting (114, 8938).
2. Select Statement of Foreign Assets (8938) from the left panel.
3. Enter the Description of asset.

For Parts I and V - Foreign Deposit and Custodial Accounts, complete the following

1. Complete these fields:
   • Type of Account : 1 = Deposit, 2 = Custodial
   • Use financial institution information from Form 114 (Ctrl+T).
   • For multi-entry fields, use Ctrl+T or Ctrl+E to open the detail window and enter multiple institutions or counterparties.
2. Complete the fields in the subsection Financial Institution Information (if not filing Form 114).
3. Select the box that applies to the asset for Line 3:
   • Account opened during year
   • Account closed during year
   • Account jointly owned with spouse
   • No tax item in Part III with respect to this asset
4. To mark Line 5 Yes, select the box Used foreign currency exchange rate to convert value to US dollars. Otherwise, the answer will be No.
5. Enter the following information for Line 6 if Yes is answered on Line 5:
   • Foreign currency in which asset is denominated
   • Foreign currency exchange rate
   • Source of exchange rate

For Part II, Other Foreign Assets, complete the following

1. Enter the Identifying number or other designation (MANDATORY for Part II and required for Lacerte to generate a complete Form 8938; missing entries may prevent the form from generating or trigger diagnostics).
2. For Line 3 enter the applicable:
   • Date asset acquired during year
   • Date asset disposed of during year
3. To select the box for Line 3c, select Jointly owned with spouse.
4. To select the box for Line 3d, select No tax item in Part III with respect to this asset.
5. To select the box for Line 5, select Used foreign currency exchange rate to convert value to US dollars. Otherwise, the answer will be No.
6. Enter the following information for Line 6 if Yes is answered on Line 5.
7. To complete Line 7, enter the information under the subsection Foreign Entity Information (Complete if stock or interest). This subsection appears in the lower-left Sections panel after you select the account or asset.
8. To complete Line 8, enter the following information in Issuer or counterparty (Ctrl+E).
   • Name
   • 1=Issuer or 2=Counterparty
   • Select the Type of Issuer or Counterparty from the dropdown box.
   • 1=US person or 2=Foreign person
   • Mailing address, city, state/province, ZIP code, and country
9. To add additional assets, select Add from the left panel and repeat the above steps.

For Part III, Summary of Tax items Attributable to Specified Foreign Financial Assets

1. Select 8938 Information from the left panel under Account/Asset.
2. Scroll down to the Part III - Summary of Tax Items section.
3. Complete all necessary input fields.
   • Only one Part III will generate for the return, regardless of the number of Forms 8938 or assets that are entered. The instructions on Page 7 only indicate to attach multiples for Parts I and II; Part III is a summary of all specified foreign financial assets reported on the return.
   • Lacerte will generate additional Forms 8938 for each asset or account added.

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Partnership Module

Use this module to enter specified foreign financial assets for partnership (Form 1065) clients so Lacerte can apply Form 8938 reporting rules at the entity level.

1. Go to Screen 60, Foreign Reporting (114, 8938).
2. Select Statement of Foreign Assets (8938) under Foreign Bank Account (114) from the left panel.
3. Enter the Description of asset.

For Part I, Foreign Deposit and Custodial Accounts, complete the following

1. Enter the following information
   • Type of Account : 1=Deposit, 2=Custodial
   • Use financial institution information from Form 114 (Ctrl+T).
   • For multi-entry fields, use Ctrl+T or Ctrl+E to open the detail window and enter multiple institutions or counterparties.
2. Complete the fields in the subsection Financial Institution Information (if not filing Form 114).
3. Select the boxes that apply to the asset:
   • Account opened during year
   • Account closed during year
4. To select Line 5 Yes, select the box Used foreign currency exchange rate to convert value to US dollars. Otherwise, the answer will be No.
5. Enter the following for Line 6 if Yes is answered on Line 5:
   • Foreign currency in which account is maintained
   • Foreign currency exchange rate
   • Source of exchange rate

For Part II, Other Foreign Assets, complete the following

1. Enter the Identifying number or other designation (MANDATORY for Part II and required for Lacerte to generate a complete Form 8938; missing entries may prevent the form from generating or trigger diagnostics).
2. For Line 3 enter the applicable:
   • Date asset acquired during year
   • Date asset disposed of during year
3. To select the box for Part VI, Line 3d, select No tax item in Part III with respect to this asset.
4. Enter Maximum value of asset during year for Line 4.
5. To select the box for Line 5, select Used foreign currency exchange rate to convert value to US dollars. Otherwise, the answer will be No.
6. Enter the following information for Line 6 if Yes is answered on Line 5.
7. To complete Line 7, enter the information in the subsection Foreign Entity Information (Complete if stock or interest). This subsection appears in the lower-left Sections panel after you select the account or asset.
8. To complete Line 8, enter the following information in Issuer or counterparty (Ctrl+E).
   • Name
   • 1=Issuer or 2=Counterparty
   • Select the Type of Issuer or Counterparty from the dropdown.
   • 1=US person or 2=Foreign person
   • Mailing address, city, state/province, ZIP code, and country
9. To add additional assets, select Add from the left panel and repeat the above steps.

For Part III, Summary of Tax items Attributable to Specified Foreign Financial Assets

1. Select General Information from the left panel under Account/Asset.
2. Scroll down to the Part III - Summary of Tax Items section.
3. Complete all necessary input fields
   • Only one Part III will generate for the return, regardless of the number of Forms 8938 or assets that are entered. The instructions on Page 7 only indicate to attach multiples for Parts I and II; Part III is a summary of all specified foreign financial assets reported on the return.
   • Lacerte will generate additional Forms 8938 for each asset or account added.

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S-Corporate Module

Use this module to enter specified foreign financial assets for S corporation (Form 1120-S) clients so Lacerte can complete Form 8938 at the corporate level.

• Go to Screen 67, Foreign Reporting (114, 8938).
• Select Statement of Foreign Assets (8938) under Foreign Bank Account (114) from the left panel.
• Enter the Description of asset.

For Part I, Foreign Deposit and Custodial Accounts, complete the following

1. Enter the following information:
   • Type of Account: 1=Deposit, 2=Custodial
   • Use financial institution information from Form 114 (Ctrl+T)
   • For multi-entry fields, use Ctrl+T or Ctrl+E to open the detail window and enter multiple institutions or counterparties.
2. Complete the information for the subsection Financial Institution Information (if not filing Form 114):
   • Maximum value of account during tax year
   • Name of institution
   • Account number (MANDATORY for Part I and required for Lacerte to generate a complete Form 8938; missing entries may prevent the form from generating or trigger diagnostics)
   • Mailing address of institution, city, state/province, ZIP code, and country
3. Select the boxes that apply to the asset:
   • Account opened during year
   • Account closed during year
4. To select Line 5 Yes,select the box Used foreign currency exchange rate to convert value to US dollars. Otherwise, the answer will be No.
5. Enter the following information for Line 6 if Yes is answered on Line 5:
   • Foreign currency in which account is maintained
   • Foreign currency exchange rate
   • Source of exchange rate

For Part II, Other Foreign Assets, complete the following

1. Enter the Identifying number or other designation (MANDATORY for Part II and required for Lacerte to generate a complete Form 8938; missing entries may prevent the form from generating or trigger diagnostics)
2. For Line 3 enter the applicable:
   • Date asset acquired during year
   • Date asset disposed of during year
3. To select the box for Part VI, Line 3d, select No tax item in Part III with respect to this asset.
4. Enter the Maximum value of asset during year for Line 4.
5. To select the box for Line 5, select Used foreign currency exchange rate to convert value to US dollars. Otherwise, the answer will be No.
6. Enter the following information for Line 6 if Yes is answered on Line 5.
7. To complete Line 7, enter the following information in the subsection Foreign Entity Information (Complete if stock or interest): This subsection appears in the lower-left Sections panel after you select the account or asset.
   • Name of entity
   • Type of entity (select from dropdown box)
   • Mailing address of entity, city, state/province, ZIP code, country
8. To complete Line 8, enter the following information in Issuer or counterparty (Ctrl+E):
   • Name
   • 1=Issuer or 2=Counterparty
   • Select the Type of Issuer or Counterparty from the dropdown.
   • 1=US person or 2=Foreign person
   • Mailing address, city, state/province, ZIP code, and country
9. To add additional assets, select Add from the left panel and repeat the steps above.

For Part III, Summary of Tax items Attributable to Specified Foreign Financial Assets

1. Select General Information from the left panel under Account/Asset.
2. Scroll down to the Part III - Summary of Tax Items section.
3. Complete all necessary input fields
   • Only one Part III will generate for the return, regardless of the number of Forms 8938 or assets that are entered. The instructions on Page 7 only indicate to attach multiples for Parts I and II; Part III is a summary of all specified foreign financial assets reported on the return.
   • Lacerte will generate additional Forms 8938 for each asset or account added.

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Corporate Module

Use this module to enter specified foreign financial assets for corporate (Form 1120/1120-F) clients so Lacerte can complete Form 8938 for the corporation when required.

1. Go to Screen 73, Foreign Reporting (114, 8938).
2. Select Statement of Foreign Assets (8938) under Foreign Bank Account (114) from the left panel.
3. Enter the Description of asset.

For Part I, Foreign Deposit and Custodial Accounts, complete the following

1. Enter the following information:
   • Type of Account: 1=Deposit, 2=Custodial
   • Use financial institution information from Form 114 (Ctrl+T).
   • For multi-entry fields, use Ctrl+T or Ctrl+E to open the detail window and enter multiple institutions or counterparties.
2. Complete the information in the subsection Financial Institution Information (if not filing Form 114).
3. Select the boxes that apply to the asset:
   • Account opened during year
   • Account closed during year
4. To check Line 5 Yes, select the box Used foreign currency exchange rate to convert value to US dollars. Otherwise, the answer will be No.
5. Enter the following information for Line 6 if Yes is answered on Line 5:
   • Foreign currency in which account is maintained
   • Foreign currency exchange rate
   • Source of exchange rate

For Part II, Other Foreign Assets, complete the following

1. Enter the Identifying number or other designation (MANDATORY for Part II and required for Lacerte to generate a complete Form 8938; missing entries may prevent the form from generating or trigger diagnostics).
2. For Line 3 enter the applicable:
   • Date asset acquired during year
   • Date asset disposed of during year
3. To select the box for Part VI, Line 3d, select No tax item in Part III with respect to this asset.
4. Enter the Maximum value of asset during year for Line 4.
5. To select the box for Line 5, select Used foreign currency exchange rate to convert value to US dollars. Otherwise, the answer will be No.
6. Enter the following information for Line 6 if Yes is answered on Line 5.
7. To complete Line 7, enter the following information under Foreign Entity Information (Complete if stock or interest): This subsection appears in the lower-left Sections panel after you select the account or asset.
   • Name of entity
   • Type of entity (select from dropdown box)
   • Mailing address of entity, city, state/province, ZIP code, country
8. To complete Line 8, enter the following information in Issuer or counterparty (Ctrl+E):
   • Name
   • 1=Issuer or 2=Counterparty
   • Select the Type of Issuer or Counterparty from the dropdown.
   • 1=US person or 2=Foreign person
   • Mailing address, city, state/province, ZIP code, and country
9. To add additional assets, select Add from the left panel and repeat the steps above.

For Part III, Summary of Tax items Attributable to Specified Foreign Financial Assets

1. Select General Information from the left panel under the Account/Asset section.
2. Scroll down to the Part III - Summary of Tax Items section.
3. Complete all necessary input fields
   • Only one Part III will generate for the return, regardless of the number of Forms 8938 or assets that are entered. The instructions on Page 7 only indicate to attach multiples for Parts I and II; Part III is a summary of all specified foreign financial assets reported on the return.
   • Lacerte will generate additional Forms 8938 for each asset or account added.

Common issues with Form 8938 in Lacerte

These are some common situations that affect whether Form 8938 generates and how it appears in the return.

• Form 8938 doesn’t generate when expected: Confirm that at least one specified foreign financial asset has been entered, that the filing thresholds are met for the taxpayer’s filing status and residency, and that all mandatory identifying number and account information fields are complete.
• Diagnostics about missing information: Fields marked as mandatory (such as identifying numbers or account numbers for Parts I and II) are required for Lacerte to produce a complete Form 8938. Missing entries can prevent the form from generating or trigger diagnostics.
• Unexpected Part III behavior: Lacerte always produces a single Part III summary per return. If multiple assets are present, they are summarized on one Part III, while additional Parts I and II are generated as needed for each asset or account.

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