I have some shares in the company that i work for. This company is a large corporation and uses a brokerage firm out of Toronto to manage these shares for the employees.
These shares payout dividends which i have claimed on my 1040.
With respect to Part 2 of the 8938 form, i am assuming i fill in line 7 as it is stock in the aforementioned company.
Having said that, what information goes on line 7a? the name of the brokerage firm that holds the shares, or the name of the company in which the shares are purchased?
Thank you
Need more help with 8938 part 2
Moderator: Mark T Serbinski CA CPA
I am going to elaborate on the above thread regarding my shares as i would really like to close the door on this last account tabulation....
i work for a company that is traded on the exchange and identified under a different name.
i, and other employees, have bought shares in our company through an 'employee share ownership program'. These shares are purchased through a brokerage firm located in another province.
the company in question will occasionally 'gift' shares into our account.
i have identified the number of shares and the class of shares (class B) on line 1 of part 2.
on line 7a "name of the foreign entity" i have listed the name the stock is traded under (not the companies name, but the name of the stock)
on line 7b i have listed the foriegn entity as a 'corporation'
on line 7c i did not check this box because i dont think the foreign entity (company) is a PFIC
on line 7c/c i put the address of the companies head office...not the brokerage firm.
have i filled this out correctly?
should i list the the name of the brokerage firm anywhere on this form?
The FBAR reporting was a lot easier as it asks the financial institution where the accouint is being held...this form has me scratching my head....especially when it comes to tabulating securities.
i work for a company that is traded on the exchange and identified under a different name.
i, and other employees, have bought shares in our company through an 'employee share ownership program'. These shares are purchased through a brokerage firm located in another province.
the company in question will occasionally 'gift' shares into our account.
i have identified the number of shares and the class of shares (class B) on line 1 of part 2.
on line 7a "name of the foreign entity" i have listed the name the stock is traded under (not the companies name, but the name of the stock)
on line 7b i have listed the foriegn entity as a 'corporation'
on line 7c i did not check this box because i dont think the foreign entity (company) is a PFIC
on line 7c/c i put the address of the companies head office...not the brokerage firm.
have i filled this out correctly?
should i list the the name of the brokerage firm anywhere on this form?
The FBAR reporting was a lot easier as it asks the financial institution where the accouint is being held...this form has me scratching my head....especially when it comes to tabulating securities.
with respect to item 7c on whether or not this stock is a PFIC...i just checked the company site and copied this excerpt regarding US investors;
XXXXXXXX believes that it is not currently, and is not likely to become in the near future, a PFIC; however, no assurance can be given in this regard.
thats one relief....
XXXXXXXX believes that it is not currently, and is not likely to become in the near future, a PFIC; however, no assurance can be given in this regard.
thats one relief....
I read the instructions, haven't had to fill this out myself, but I wouldly put the name of the company rather than the name of the stock. The instructions say that if it is a stock of a foreign entity, complete 7a to 7e. So I think they are looking for the name of the corporation. The name of the stock would be in the description you give on line 1.
Thanks Primo..
so just to clarify...in your understanding. If the company name was 'Widget" and 'Widget" was traded on the exchange as 'Songbird", then one would tabulate the following on part 2;
line 1 would specify the stock and the amount of shares ie: 30 SHARES OF CLASS B STOCK IN SONGBIRD
line 7a would list the corporation, in this case WIDGET (with the corresponding address of the WIDGET corporation on 7e,d)
there is no real requirement to list the brokerage company...
does this sound like i am now on the right track with this?
so just to clarify...in your understanding. If the company name was 'Widget" and 'Widget" was traded on the exchange as 'Songbird", then one would tabulate the following on part 2;
line 1 would specify the stock and the amount of shares ie: 30 SHARES OF CLASS B STOCK IN SONGBIRD
line 7a would list the corporation, in this case WIDGET (with the corresponding address of the WIDGET corporation on 7e,d)
there is no real requirement to list the brokerage company...
does this sound like i am now on the right track with this?
You get a Canadian tax slip for the dividends distributed for these shares. Who issues that tax slip? If the tax slip is issued by the brokerage firm in Toronto, then you have an account (which happens to hold these shares), and you report that account in Part I (not in Part II), which means that all your 7abc questions don't arise.
Page 8 of the 8938 instructions say "Use Part II to report information for specified foreign financial assets not held in a foreign financial account."
If you have an account containing shares, bonds, etc., then on the 8938 you list that account in Part I, but you do not list the shares, bonds, etc. held in that account *anywhere* on the 8938. So if your shares are held in an account with an identifying account number, you report only the account, not the shares themselves.
Page 8 of the 8938 instructions say "Use Part II to report information for specified foreign financial assets not held in a foreign financial account."
If you have an account containing shares, bonds, etc., then on the 8938 you list that account in Part I, but you do not list the shares, bonds, etc. held in that account *anywhere* on the 8938. So if your shares are held in an account with an identifying account number, you report only the account, not the shares themselves.
Filo, you raise and interesting observation.
I had initially listed it on Part 1, but then i re-read the 8938 instructions and the following point keeps coming back to me is the example they make reference to on page 5 of the 8938 instructions;
Line 1. Enter a description of the asset. If the asset is stock or securities, include the class or issue of the stock or securities.
Example 1. You own 100 shares of XYZ Company, an Italian S.A. A sufficient description is “100 Class A shares of XYZ Company, S.A.â€
The other point that seems to steer me to Part 2 is on page 4 of the 8938 instructions they outline certain definitions and under "Other specified foreign financial assets" they give an example of a Stock issued by a foreign corporation.
It could be that either Part 1 or Part 2 is satisfactory...i just don't know...and i was on the phone to the IRS today...twice...and they just don't want to discuss this form.
They just keep telling you to read the instructions, and review the FAQs off there website.
I had initially listed it on Part 1, but then i re-read the 8938 instructions and the following point keeps coming back to me is the example they make reference to on page 5 of the 8938 instructions;
Line 1. Enter a description of the asset. If the asset is stock or securities, include the class or issue of the stock or securities.
Example 1. You own 100 shares of XYZ Company, an Italian S.A. A sufficient description is “100 Class A shares of XYZ Company, S.A.â€
The other point that seems to steer me to Part 2 is on page 4 of the 8938 instructions they outline certain definitions and under "Other specified foreign financial assets" they give an example of a Stock issued by a foreign corporation.
It could be that either Part 1 or Part 2 is satisfactory...i just don't know...and i was on the phone to the IRS today...twice...and they just don't want to discuss this form.
They just keep telling you to read the instructions, and review the FAQs off there website.
I understand what you're saying about the example on page 8, but that applies to shares not held in an account.
My wife owns a small number of shares in a Canadian corporation. Those are non-account assets: she herself possesses the stock certificate, a fancy document issued by that Canadian corp. Do you possess the stock certificate for the shares you own? (If they're held in an account, you don't.)
8938 instructions page 4, 3rd column says this:
"Interests in assets held in financial accounts: If you have an interest in a financial account that holds specified foreign financial assets, you do not have to report the assets held in the account."
The IRS is saving people a lot of trouble by their not having to report separate assets held in an account as long as the account is reported in Part I.
My wife owns a small number of shares in a Canadian corporation. Those are non-account assets: she herself possesses the stock certificate, a fancy document issued by that Canadian corp. Do you possess the stock certificate for the shares you own? (If they're held in an account, you don't.)
8938 instructions page 4, 3rd column says this:
"Interests in assets held in financial accounts: If you have an interest in a financial account that holds specified foreign financial assets, you do not have to report the assets held in the account."
The IRS is saving people a lot of trouble by their not having to report separate assets held in an account as long as the account is reported in Part I.
"i was on the phone to the IRS today...twice...and they just don't want to discuss this form. "
You are echoing the grief that many people have experienced. The replies from the IRS personnel regarding the 8938 vary from "I'm not trained in that form" to "Just follow the directions."
The unanswerable questions include at least the following: Deposit/Custodial (say what?); Type of Entity/Issuer/Counterparty (what do I do with a foreign government commission that is definitely not a Corporation??); Other Income (is this where we put pensions???); Continuation Sheet (lotsa luck). The IRS doesn't know. It only wrote the form, it can't read it.
You are echoing the grief that many people have experienced. The replies from the IRS personnel regarding the 8938 vary from "I'm not trained in that form" to "Just follow the directions."
The unanswerable questions include at least the following: Deposit/Custodial (say what?); Type of Entity/Issuer/Counterparty (what do I do with a foreign government commission that is definitely not a Corporation??); Other Income (is this where we put pensions???); Continuation Sheet (lotsa luck). The IRS doesn't know. It only wrote the form, it can't read it.
Filo,
You wrote;
My wife owns a small number of shares in a Canadian corporation. Those are non-account assets: she herself possesses the stock certificate, a fancy document issued by that Canadian corp. Do you possess the stock certificate for the shares you own? (If they're held in an account, you don't.)
I think i know what you are saying now, and this is starting to make sense to me.
I DO NOT have in my possess any paperwork regarding this stock such as certificates, (other than the periodic statements they send to me, the yearly 'booklet' on the stock perspectice, and my yearly T5 statement form the brokerage firm showing me my taxable amount of eligible dividends).
The question i have to ask in order to nail this down is the brokerage firm that holds the stock actually a financial institution? I would think so...
The only question to answer before i nail this account down to Part 1, is this....i have been referring to the entity that holds my shares as a 'brokerage firm' but i am not exactly sure what they are???
My shares are handled by a company called Computershare in Toronto Ontario...and there is not information that i can find that gives me a clear understanding of there definition.
You wrote;
My wife owns a small number of shares in a Canadian corporation. Those are non-account assets: she herself possesses the stock certificate, a fancy document issued by that Canadian corp. Do you possess the stock certificate for the shares you own? (If they're held in an account, you don't.)
I think i know what you are saying now, and this is starting to make sense to me.
I DO NOT have in my possess any paperwork regarding this stock such as certificates, (other than the periodic statements they send to me, the yearly 'booklet' on the stock perspectice, and my yearly T5 statement form the brokerage firm showing me my taxable amount of eligible dividends).
The question i have to ask in order to nail this down is the brokerage firm that holds the stock actually a financial institution? I would think so...
The only question to answer before i nail this account down to Part 1, is this....i have been referring to the entity that holds my shares as a 'brokerage firm' but i am not exactly sure what they are???
My shares are handled by a company called Computershare in Toronto Ontario...and there is not information that i can find that gives me a clear understanding of there definition.