I have a brokerage account in South Korea where I hold individual stocks and the balance of the account meets the reporting threshold. Should this be reported as a financial account (deposit/custodial) which is Part I and Part V of the actual form or should this be reported as other foreign assets under Part II and Part VI? The IRS instruction seems to suggest that brokerage account would fall under other foreign assets and not a financial account. Appreciate confirmation on this.
@sk124 , financial accounts would generally be liquid cash or CDs , that are essentially and quickly li convertible to cash.
A brokerage account with stocks and bonds etc. would be "other" . However, a brokerage holding cash for investment purposes would be a custodial account. Ditto for Pension accounts would mostly be classed as custodial in nature. The form is trying to cover all liquid and semi liquid accounts for purposes of FATCA reporting.
Note FBAR filing is only cash in bank / financial accounts which you own and control OR have signature authority over ( may be operated/ owned by others )
Does this help ?
@sk124 , financial accounts would generally be liquid cash or CDs , that are essentially and quickly li convertible to cash.
A brokerage account with stocks and bonds etc. would be "other" . However, a brokerage holding cash for investment purposes would be a custodial account. Ditto for Pension accounts would mostly be classed as custodial in nature. The form is trying to cover all liquid and semi liquid accounts for purposes of FATCA reporting.
Note FBAR filing is only cash in bank / financial accounts which you own and control OR have signature authority over ( may be operated/ owned by others )
Does this help ?
Yes, this helps! Since my account contains no cash, I will report under "other foreign assets". Thank you @pk for the explanation. Though, it brings up another question in my mind. In the future if I were to sell any of the stocks I'm holding, I would have cash in the account along with other stocks that I am continuing to hold. If the account has both cash + stocks, is that still a "other foreign asset" for the purpose of 8938?
@sk124 if the cash is held for investment and stocks -- you report two entries --- "other" covering stocks owned/ held by the brokerage and a second entry , same brokerage with " custodial" account.. It is not very important for purposes of identifying diff. categories ( because these may change during the year. However it is important to aggregate all these categories for purposes of the total value and/or threshold.
Does this make sense ?
pk