Form 8938 and FBAR for Canadian brokerage account

[lbeauvil]

For a US citizen living in Canada, how do we file form 8938 and FBAR for stocks held in a Canadian brokerage account?
Do we need to list each securities individually or just the total in the account?
Do we need to include US securities that are held in this Canadian account or just Canadian securities?
I believe that a brokerage account is a custodial account. Does that sound right?

[pencileveryone]

I was going to post the exact same question. I am a GC holder and it's my first year filing my US return after moving to Canada and transferring my assets to a canadian institution.

[lbeauvil]

I think I found the answer to part of my questions on an IRS site.
"If you have a financial account maintained by a foreign financial institution and the value of your specified foreign financial assets is greater than the reporting threshold that applies to you, you need to report the account on Form 8938. A foreign account is a specified foreign financial asset even if its contents include, in whole or in part, investment assets issued by a U.S. person. You do not need to separately report the assets of a financial account on Form 8938, whether or not the assets are issued by a U.S. person or non-U.S. person."
https://www.irs.gov/businesses/corporat ... 8938#FFIQ1

I now need to know if a brokerage account is a "Custodial" account.

[pencileveryone]

Let me know if you find anything! Thanks!

[pencileveryone]

I found this on this site, but not sure about the source. Based on this definition, I think a brokerage account should be custodian.

https://www.expatforum.com/threads/form ... da.745914/


Page 9 of this guide provides definitions of depository and custodial accounts, and those definitions seems to be well sourced. I'll quote the relevant section from the guide:

b. "Depository account"
(1) In general
A "depository account" is generally any account that is:
(i) a commercial, checking, savings, time, or thrift account, or an account evidenced by a certificate of deposit, thrift certificate, investment certificate, passbook, certificate of indebtedness, or any other instrument for placing money in the custody of a banking or similar business for which such entity is obligated to supply credit; or
(ii) any amount held by an insurance company under a guaranteed investment contract or similar agreement to pay or credit interest thereon or to return the amount held.


Reg. §1.1471-5(b)(3)(i)(A).

(2) Instruments/deposits not treated as "depository accounts"
Notwithstanding the general definition above, a "depository account" does not include:
(i) a negotiable debt instrument that is traded on a regulated market or OTC market and distributed and held through an FI (or FIs); or
(ii) an advance premium or premium deposit with respect to an insurance contract, in the case where the premium is payable at least annually and such advance premium or premium deposit does not exceed the next annual premium that will be payable under the contract.
Reg. §1.1471-5(b)(3)(i)(B); -5(b)(3)(vii)(C)(5).

c. "Custodial account"
A "custodial account" is an arrangement for holding a financial instrument, contract, or investment (including corporate stock, a note, bond, debenture or other evidence of indebtedness, a currency or commodity transaction, a credit default swap, a swap based upon a nonfinancial index, a notional principal contract (as defined in §1.446-3(c)), an insurance or annuity contract, and any option or other derivative instrument) for the benefit of another person. Reg. §1.1471-5(b)(3)(ii).

Or, in somewhat oversimplified terms, a depository account is or closely resembles an ordinary bank account (savings, checking/current, etc.) where you hold cash as cash. A custodial account is something else.

[pencileveryone]

Ah, I found the definition here as well. This seems legit.

(ii) Custodial account. The term custodial account means an arrangement for holding a financial instrument, contract, or investment (including, but not limited to, a share of stock in a corporation, a note, bond, debenture, or other evidence of indebtedness, a currency or commodity transaction, a credit default swap, a swap based upon a nonfinancial index, a notional principal contract as defined in § 1.446-3(c), an insurance or annuity contract, and any option or other derivative instrument) for the benefit of another person.

https://www.law.cornell.edu/cfr/text/26/1.1471-5#b_3_ii