He has a note, which is physically in the United States, from a foreign obligor.
The validity of the note is recognized by the IRS (e.g market rate interest, etc.) and the interest on this note is subject to tax, as well as the borrowings to fund this new are being allowed as interest expense on the amended returns.
The Revenue Agent currently has assessed the 25% FBAR penalty on the value of this note held here in the United States.
Factually there's a distinction from other foreign investments, in that the note is physically here in the United States and the taxpayer made no attempt to hide this investment through a foreign bank account or a foreign company. (Maybe a distinction without a difference?)
Any thoughts on the validity subjecting this note, from a foreign obligor, to the 25% FBAR pursuant to the 2011 OVDI program?