Page 253 - TaxAdviser_2022

cash. Although the purchases involve Transactions in which the entire transac-
A transaction different goods and occur on differ- tion, including the receipt of cash, occurs
ent days, the purchases occur within
outside of the United States need not be
cannot be separated a 24-hour period and are considered reported.25 However, if any part of the
into multiple related transactions; therefore, entire transaction occurs in Puerto Rico,
or a possession or territory of the United
the total amount ($10,500) must
transactions to avoid be reported. States and the cash recipient is subject
reporting — these are to the jurisdiction of the IRS, then the
considered ‘related Example 2: A doctor charges cash recipient must file a Form 8300.26
Although not excepted from reporting,
$11,000 for medical treatments to
transactions.’ an individual. The individual pays there are specific reporting requirements
$6,000 cash after the treatment, then for criminal court clerks receiving more
pays the balance in two installments: than $10,000 in bail.27
$3,000 in cash one month later and
property; exchanges of cash for other the final $2,000 cash payment in What is (and is not)
cash; contributions to trust or escrow the following month. The aggregate considered ‘cash’?
arrangements; payments of preexisting amount of cash paid represents a Under its most narrow definition, “cash”
debts; conversions of cash to negotiable single transaction, the provision of includes coin and currency of the United
instruments; reimbursement of expenses; medical services, that must be re- States, as well as foreign currency.28 Cash
and repayment of loans.19 ported by the doctor on Form 8300. does not include such items as personal
A transaction cannot be separated checks, wire transfers, credit card pay-
into multiple transactions to avoid Example 3: A customer purchases a ments, ATM or debit card payments,
reporting — these are considered piece of factory equipment for $9,500 or ACH (Automated Clearing House)
“related transactions.” Related cash and 10 months later purchases payments. In addition, financial instru-
transactions involve multiple payments replacement parts, accessories, and ments such as cashier’s checks or bank
that are all related to the same equipment services for $1,500 cash. checks, bank drafts, traveler’s checks,
underlying event resulting in the initial If the additional transactions were and money orders with face amounts in
transfer of cash.20 They include (1) not a part of the original $9,500 excess of $10,000 are not cash; financial
any transaction between a payer and a sales contract and the customer has institutions have a separate reporting
recipient of cash in a 24-hour period, no legal obligation for the addi- obligation in this area that is outside the
or (2) any such transactions during a tional purchases, this is not a report- scope of the present discussion.29
period in excess of 24 hours if the cash able transaction. Under certain circumstances, the
recipient knows or has reason to know definition of cash is expanded to include
that each transaction is one of a series of There are limited exceptions to the the previously noted financial instru-
connected transactions.21 reporting requirements. They include ments in amounts which are not in excess
financial institutions22 and casinos of $10,000. If such financial instruments
Example 1: In the afternoon, an in- with gross annual gaming revenue of are received in either a “designated re-
dividual purchased a table at a retail more than $1 million.23 In addition, porting transaction,” or in a transaction
furniture business for $8,000 cash. transactions that are not related to a in which the recipient knows that such
The next morning, the individual trade or business (e.g., a sale of a per- instrument is being used in an attempt
returns to the same establishment sonal automobile or boat for more than to avoid the filing of a Form 8300, then
and purchases a painting for $2,500 $10,000 cash) need not be reported.24 such instruments are considered cash.30

19. Regs. Sec. 1.6050I-1(c)(7)(i). 27. Sec. 6050I(g).
20. Id. 28. Regs. Sec. 1.6050I-1(c)(1)(ii)(A).
21. Regs. Sec. 1.6050I-1(c)(7)(ii). 29. Financial institutions must file currency transaction reports for cash
22. Regs. Sec. 1.6050I-1(d)(1). purchases of cashier’s checks, treasurer’s checks, bank drafts, traveler’s
23. Regs. Sec. 1.6050I-1(d)(2). checks, and money orders with face values greater than $10,000.
24. Regs. Sec. 1.6050I-1(d)(3). 30. Regs. Sec. 1.6050I-1(c)(1)(ii)(B).
25. Regs. Sec. 1.6050I-1(d)(4).
26. Id.

www.thetaxadviser.com May 2022 35