# FBAR: How to determine aggregage maximum account value?

Suppose you have two foreign accounts: A and B. Is the formula for determining "aggregate maximum value" for foreign accounts as defined by Fincen max(A) + max(B) or max(A + B)? This would obviously matter if you have the following balances during the year:

 01:    A: $6,000 B:$0,000  A+B: $6,000 02: A:$6,000  B: $0,000 A+B:$6,000
03:    A: $6,000 B:$0,000  A+B: $6,000 04: A:$6,000  B: $0,000 A+B:$6,000
05:    A: $6,000 B:$0,000  A+B: $6,000 06: A:$6,000  B: $0,000 A+B:$6,000
07:    A: $0 B:$6,000  A+B: $6,000 08: A:$0      B: $6,000 A+B:$6,000
09:    A: $0 B:$6,000  A+B: $6,000 10: A:$0      B: $6,000 A+B:$6,000
11:    A: $0 B:$6,000  A+B: $6,000 12: A:$0      B: $6,000 A+B:$6,000


If the first formula is used you would have

max(A) + max(B) = $6,000 +$6,000 = $12,000  and since this exceeds$10,000 you would have to file FBAR, whereas if the latter formula is used you would have

max(A + B) = $6,000  and since this is below$10,000 you would not have to file FBAR. Which is the correct way to obtain the "aggregate maximum value" for the accounts?

The FinCEN instructions (https://www.fincen.gov/sites/default/files/shared/FBAR%20Line%20Item%20Filing%20Instructions.pdf) are clear that the maximum value of each account is determined, converted to U.S. dollars, and then aggregated and compared to $10,000. • This is not the answer I expected to find. To take a simpler example than yours, suppose I have an account with$6,000 and partway through the year I transfer the entire amount to another account. I wouldn’t expect to need to file a report. But according to the instructions, I would.
– prl
Jun 23, 2019 at 1:36
• Thanks for providing the simpler example. I have edited the question to use your example.
– D R
Jun 23, 2019 at 13:19
• However, the first page of the instructions have "if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the calendar year" which they won't have done in this case (at all times, the money would be in one account or the other). It seems to me (from outside the US) that the spirit of FBAR is that this situation shouldn't need reporting, but the instructions for calculating the aggregate maximum value haven't taken into account that money might be moved from one account to another. Jun 24, 2019 at 7:21 Note: I am neither a lawyer nor a financial adviser. This is neither legal nor financial advice. TL;DR: In this situation, you have to file an FBAR (but, apart from the hassle of doing so, this should not cause any problems). The full PDF of the instructions you link can be found at BSA Electronic Filing Requirements For Report of Foreign Bank and Financial Accounts (FinCEN Form 114). Despite the "General Instructions" section including: Who Must File an FBAR. A United States person that has a financial interest in or signature authority over foreign financial accounts must file an FBAR if the aggregate value of the foreign financial accounts exceeds$10,000 at any time during the calendar year. See General Definitions, to determine who is a United States person.
(emphasis mine)

The actual step-by-step instructions (starting on page 10 of the PDF) state:

Step 1. Determine the maximum value of each account (in the currency of that account) during the calendar year being reported. The maximum value of an account is a reasonable approximation of the greatest value of currency or nonmonetary assets in the account during the calendar year. [...] if the filer had a financial interest in more than one account, each account must be valued separately.
(emphasis mine)

and then continue:

If the maximum account value of a single account or aggregate of the maximum account values of multiple accounts exceeds $10,000, an FBAR must be filed. An FBAR is not required to be filed if the person did not have$10,000 of maximum value or aggregate maximum value in foreign financial accounts at any time during the calendar year.
(emphasis mine)

Together, these mean that, for example, \$6,000 transferred from one foreign account to another will contribute to the "maximum value of each account during the calendar year being reported" for both accounts. The instructions do not seem to take such transfers into account (indeed, the word "transfer" is not present in the document).

This view is seconded by the article How to Determine Maximum Annual Account Balance for FBAR on the Taxes for Expats website. That article seems tailor-made for your situation, posing (and answering) the question:

I have transferred funds between accounts; do these balances get counted twice?

Simply put, yes.

But don’t be too concerned. It is understandable if you don’t want to appear to have more assets than you actually have, but the government is not going to give you extra scrutiny for the differences between USD 550,000 and USD 700,000. The US Department of the Treasury is aware that transfers can cause funds to be double counted.

The regulations require you to report “the maximum account value of each account” within the timespan of the FBAR reporting period. Notice that there is no reference to tieing out the balances to the total worth.

So, not only do you not need to adjust your balances to avoid double counting, but in reality it is not the correct way to do it. It is the maximum account balance of each account that must be reported.

It then notes:

FBAR is purely an informational form and there is no tax assessed on the amounts reported. Therefore, reporting the transferred funds twice does not have any financial consequences.

So, the only downside of the US Treasury not taking transferred money into account is some extra form-filling.