PFIC Wrapper Miniseries #2: Participating Life Insurance
This week’s topic is the second of a series of posts that will talk about how various “wrappers” affect the US taxation of PFICs. The last post discussed Canadian RESP. This post discusses a...
View ArticlePFIC Wrapper Miniseries #3: Products That Sound Like Life Insurance
PFIC wrapped in a continental life insurance This week’s topic is the third of a series of posts that will talk about how various “wrappers” affect the US taxation of PFICs. The last post discussed...
View ArticleRunning Your IP Licensing Subsidiary
Today’s post is a followup to a post I made back in May. The setup is this: I own 40% of a BVI corporation, and a nonresident alien owns the other 60%. The BVI corporation owns an operating subsidiary...
View ArticleGaps Between PFIC and Controlled Foreign Corporation Anti-Deferral Coverage
Gaps between subpart F income and PFIC classification Today’s post is about a few gaps between taxation under the subpart F rules for controlled foreign corporations and passive foreign investment...
View ArticleReducing PFIC Tax by Annualizing the First Year Distributions
This is a question we got in an email: My client bought shares in a foreign mutual fund a few years ago. I see from the client’s statements that the average distribution for the last few years has been...
View ArticleDeferring tax on PFIC income using your foreign operating company
Today’s post is a war story about a pair of US citizen former clients whose PFIC issues we helped clean up. The question, paraphrased, is more or less like this: We are equal shareholders of a...
View ArticleLookthrough Rules When Your Foreign Corporation Owns PFICs
What happens when a US citizen owns shares of a foreign corporation, and the foreign corporation owns shares in PFICs–for example, foreign mutual funds or money market funds? Does the US citizen need...
View ArticleWhen You Have to File Both Form 5471 and Form 8621
Filing Form 5471 and Form 8621 for the same foreign corporation This is a question that we get a lot: If I own shares in a foreign corporation, and I file Form 5471, then I do not have to file Form...
View ArticleYour Stock Options in a PFIC
Getting a stock option from a PFIC Here is a question from an email: I am employee of a PFIC. My employer issued some stock options to me as part of my compensation. Do I have a PFIC problem? This post...
View ArticleHolding Business Real Estate in a Separate Company
Renting land to yourself Today’s post is a case study of why you might avoid PFIC classification if you rent land to your own business. This post also shows why 50-50 joint ventures are rather...
View ArticlePFIC Problems when Pooling Stock Reward
Pooling your stock reward We got a fairly complex question about a US person pooled his stock reward with his coworkers. By doing so, the US person created a potential PFIC problem. This post is a...
View ArticleAre my Exchange Traded Notes PFICs?
Debts instruments that sound somewhat like shares This is a question that came by way of email: I own some exchange traded notes. Are those PFICs? In this post, I will discuss the factors that you can...
View ArticleAttribution of PFICs Through a Family Trust
Today’s topic is based on some war stories we have seen. Here is the general situation we have had to deal with: I am a US citizen living abroad and married to a foreign national. She and I both owned...
View ArticleMark-to-Market Election for PFICs You Own Through a Fund
PFICs held in a fund This is a situation we see fairly often: I have a foreign retirement account. I realized that I am taxed on the income from the account as if it is a normal account. The account...
View ArticleIs My Retail Super Fund a PFIC?
Is my pension fund a PFIC? This is a question we get frequently through email: I have a pension fund. Is that a PFIC? Unfortunately, there is no easy answer to this question, because every country has...
View ArticleIs My Investment in a Foreign Corporation?
This is a question we get through email and client work fairly often. I made an investment into a foreign investment vehicle. Maybe it is a partnership rather than a PFIC? This post is something of a...
View ArticleLiquidating Distribution From a PFIC
Liquidating distribution from a PFIC This is a question I received in an email: I invested in a PFIC. The PFIC decided to liquidate. It sold all its investments, paid its major liabilities, then paid...
View ArticleLoss From Selling a PFIC
Here is a question we often get from emails: I own shares in an exchange traded fund. It is a PFIC. I have not made any elections for the shares. What happens if I sell it at a loss? This post...
View ArticleGain from a PFIC Bought and Sold in the Same Year
This is a question we received through an email: I bought shares in a foreign mutual fund and sold it in the same year. I made a gain on the sale. I am sure the mutual fund is a PFIC. Do I have any...
View ArticleAsset Held in Trust for the PFIC Asset Test
Asset held in trust and the PFIC asset test This is a war story from client work: I own shares of a private company. It is the trustee of a family trust. Should I include the trust’s assets when I...
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