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A taxpayer with shares in a passive foreign investment company (a “PFIC”) may qualify to make either a qualified electing fund (“QEF”) election or an election to apply mark-to-market treatment with respect to marketable stock. All things equal, taxpayers will typically prefer QEF treatment. The code, however, requires that the taxpayer meet certain criteria before they can make a valid QEF election. If a taxpayer makes a mark-to-market election, the Code generally provides that the MTM election remains in place until the foreign company ceases to be a PFIC or the IRS consents to the revocation of the MTM election in light of a “substantial change in circumstances.”
Sometimes, the information necessary to make a QEF election is not available at the time that the taxpayer files their tax return. Indeed, investments in PFICs can present notorious challenges in terms of obtaining the necessary documentation to support a QEF election.
What Every American Investor Must Know
Forms Required By #Americansabroad 101 – The Explanation
The following is a response to comments made about an article written by Rachel Heller on medium.com titled, “Why I renounced my US citizenship (Hint: it’s not because I’m avoiding taxes!).” The article was well written, interesting and attracted responses from Homeland Americans. (It was reproduced here and attracted even more comments.) The comments from U.S. residents demonstrated again that they do NOT understand the problems experienced by Americans abroad.
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