Stock Account vs Stock Certificate
Stock Account vs Stock Certificate: When it comes to FBAR reporting and the IRS, one of the more difficult aspects of completing the form is determining which accounts are considered foreign financial accounts and are required to be disclosed on the FBAR. What also complicates the reporting, is that the FBAR counterpart “Form 8938” has similar reporting — but not identical — this may lead to some taxpayers over-reporting on the FBAR for items that are not reportable.
One common example of this is the stock account versus stock certificate.
Stock accounts are very common in foreign countries as well as the United States.
A person may have a stock account with a single account number that contains several different stocks. Foregoing the tax analysis of the underlying stocks, from a reporting standpoint, a stock account is included on the FBAR. In other words, the US Person does not have to parse out each specific stock and include it separately on the FBAR.
Rather, just the value of the account — inclusive of all the stock values within the account is normally sufficient.*
*Of course you should review the details with your tax preparer to make sure that there are not sub-accounts under the main account that may need to be filed separately.
A stock certificate is not generally included on the FBAR.
That is because if you own a stock certificate, that is not an account per se and you are (probably) not a Foreign Financial Institution (FFI).
There is a potential exception, which is that if you own stock certificates in a safety deposit back or something similar, within an FFI and the FFI has access to the box, then the IRS may take the position that it should be included on the FBAR.
Always Review the Account Structure Before Filing
In conclusion, in many different countries, they have different variations of investment type of accounts. Just because your stock account may be set up one way in the United States does not mean your foreign stock account is set up the same way.
It is important to evaluate the structure of the account to determine whether it is just a single account or an account with sub-accounts — in which the sub-accounts may be required to be filed and included separately on the FBAR.
FBAR Amnesty Program Summary
The FBAR Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.
Some of the more common programs, include:
- Voluntary Disclosure Program (VDP or “New” OVDP)
- Streamlined Domestic Offshore Procedures
- Streamlined Foreign Offshore Procedures
- Delinquency Procedures
- Reasonable Cause
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