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Archive for PFIC

A Landscape PAINting Of The Effects Of U.S. Citizenship-Taxation On U.S. Citizens Living Outside The U.S.

A Landscape PAINting Of The Effects Of U.S. Citizenship-Taxation On U.S. Citizens Living Outside The U.S.

Introduction:

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PFIC And Canadian Mutual Funds – Part II

(This is a continuation from the article posted yesterday. Click here to read it.)

Ok, it is PFIC. So what?

In 1986, Congress added the PFIC rules to the Internal Revenue Code because of concerns that American taxpayers investing in passive assets indirectly through a foreign investment company have an inappropriate tax benefit compared to direct investments in these assets. The purpose of the PFIC rules was to eliminate this advantage. Read more

PFIC And Canadian Mutual Funds

Why are PFIC rules important for holders of Canadian mutual fund?

Many American citizens living or working in Canada have invested in Canadian mutual funds – likewise, many Canadians who subsequently moved to the United States retained their Canadian mutual funds holdings. They likely are unaware of the PFIC rules. Consequently many American taxpayers holding Canadian PFIC have not met their reporting obligations. Not only that  but PFIC investments are to be avoided since its taxation (with the exception of the QEF regime) is designed to be punitive. Read more

Final Regulations Clarify Exceptions To PFIC Reporting

Ephraim Moss, PFIC reporting

The IRS recently finalized regulations, previously in proposed and temporary form, which provide guidance on determining the ownership of a passive foreign investment company (PFIC) and the reporting obligations of PFIC owners. The final regulations make some changes to the proposed and temporary regulations based on comments that the IRS received from taxpayers and taxpayer organizations.

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