I own $36000 of AHOLD stock. The company is based in the Netherlands and I paid $117 in foreign tax through my Wells Fargo Advisor brokerage. Is this considered a foreign account?

[GeoffreyG · Accepted solution]

For purposes of the IRS and US Treasury Department disclosure rules for foreign financial accounts (and the related questions in TurboTax), the answer to your question is no.  Holding the common stock (or bonds, or any other financial instrument for that matter) issued by a publicly-traded foreign company, at a domestic (United States) brokerage firm, is not considered as "having an interest" or owning a foreign financial account.

On the other hand, if you had a brokerage account at a bank in the Netherlands, and held AHOLD stock there as your transfer agent, then that would qualify as a foreign financial account for you, and would thus have to then be disclosed as such.

Similarly, if such a hypothetical Netherlands brokerage account held stock in the common equity of Wells Fargo (a US-based bank), then that would still be a "foreign" account for you, in the eyes of the IRS, even though you would be an American holding stock in an American company.

Does that reasoning make sense?  The key triggering factor, you see, for foreign financial account reporting, is where the brokerage account is based (i.e., in which country it is established), not on what assets the account actually holds.

Thank you for asking this important question.