Objectives of the Presentation
After completing this course, you will be able to:
Why Should you Attend
- Identify investment holdings that require reporting as a PFIC on IRS Form 8621
- Recognize the elections available to minimize the impact of PFIC holdings on filing
- Discern the specific requirements for making the elections
- Ascertain tax impacts of PFIC elections
- Recognize a properly completed Form 8621
Among the most complex of IRS requirements affecting individual taxpayers are the rules for PFICs. Taxpayers owning interests in PFICs have a significantly higher reporting burden than U.S. taxpayers owning interests in U.S.-based mutual funds. Further complicating matters is that, unlike U.S.-based funds, foreign investments have no obligation to furnish U.S.-based investors with any tax reporting information, so the responsibility falls entirely on the shareholder to determine ownership share and tax obligations arising from that share.
In recent years, the IRS has issued several Notices to provide guidance in clarifying the reporting obligations of PFIC holdings. The result of this guidance is that more taxpayers are filing Form 8621 than in the past.
While the thresholds for determining whether an investment qualifies as ownership of a PFIC seem relatively straightforward, there are exceptions and exclusions to those definitions. Further, the Code provides for elections for the taxpayer to elect out of the "tax and interest" regime of IRC 1291. However, each method of electing out of PFIC treatment has tax and reporting consequences, and tax advisers must have a thorough knowledge of the tax impact of these elections in advising their clients.
Who will Benefit
- Types of foreign investments that must be reported as PFIC holdings
- Calculating the "tax and interest" on PFICs under IRC 1291
- Available elections to opt out of PFIC treatment
- Tax effects of these elections, from a tax due and a reporting standpoint
- Completing a Form 8621 to report PFIC holdings, including reporting elections
- Tax Return Preparers
- Tax Advisors
- Securities Dealers