Deposit or Custodial Account?

Technical topics regarding tax preparation.
#1
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Form 8938 Part V Line 1 "Type of account", there are only two choices on the form: Deposit or Custodial.

The filer has a mutual fund account. So it is not a deposit account. And it is not a custodial account either. Therefore, neither of the two should be checked. But the program needs one of the two to be checked in order to clear an error message.

If we must check one of the two in order to clear the error message, which one should we go for?
 

#2
Doug M  
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Custodial infers responsibility for someone else. Minor or someone in care. I would check deposit.
 

#3
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Doug M wrote:Custodial infers responsibility for someone else. Minor or someone in care. I would check deposit.


Thank you for your opinion.

Not to debate you, but my concept of a deposit account is one that you put money into it or withdraw money from it when needed. So it seems to me it does not make much sense to call a brokerage account for securities trading a 'deposit' account either.

I think brokerage firms in general serve as the 'custodian' of brokerage accounts (please correct me if I am wrong). Based on this concept, would it be more appropriated to call a brokerage account a custodial account instead of a deposit account?
 

#4
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I think this is the relevant section:

Code: Select all
26 CFR 1.1471-5 - Definitions applicable to section 1471

(b)(3) Definitions. The following definitions apply for purposes of chapter 4 -

(i)Depository account -

(A)In general. Except as otherwise provided in this paragraph (b)(3)(i), the term depository account means any account that is -

(1) A commercial, checking, savings, time, or thrift account, or an account that is 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 an entity engaged in a banking or similar business for which such institution is obligated to give credit (regardless of whether such instrument is interest bearing or non-interest bearing), including, for example, a credit balance with respect to a credit card account issued by a credit card company that is engaged in a banking or similar business; or

(2) Any amount held by an insurance company under a guaranteed investment contract or under a similar agreement to pay or credit interest thereon or to return the amount held.

(B)Exceptions. A depository account does not include -

(1) A negotiable debt instrument that is traded on a regulated market or over-the-counter market and distributed and held through financial institutions; or

(2) An advance premium or premium deposit described in paragraph (b)(3)(vii)(C)(5) of this section.

(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.
 

#5
Doug M  
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Oops posted at same time as tb in sf
 

#6
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Sorry for digging up an old thread.

"(i)Depository account -

(A)In general. Except as otherwise provided in this paragraph (b)(3)(i), the term depository account means any account that is -

(1) A commercial, checking, savings, time, or thrift account, or an account that is 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 an entity engaged in a banking or similar business for which such institution is obligated to give credit (regardless of whether such instrument is interest bearing or non-interest bearing), including, for example, a credit balance with respect to a credit card account issued by a credit card company that is engaged in a banking or similar business; or..."


Does "investment certificate" there refer to stocks/securities?
 

#7
Nilodop  
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Why not Other Foreign Assets, Part VI.
 


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