Americans Abroad: Passive Foreign Investment Companies (Form 8621)

Description

Tax and reporting rules for Passive Foreign Investment Company can be complicated and confusing. We review how you can determine whether you have a PFIC by applying the PFIC definition, lookthrough rules and the attribution rules, as well as look at the different ways in which PFICs can be taxed, whether under the default rules of IRC Sec. 1291, the Mark-to-Market election or the QEF rules. We will go through some examples of how to perform the calculations and prepare the forms under each of the three methods of taxation and, lastly, we will cover the "once a PFIC, always a PFIC" rule and the purging elections that may be available if you find out too late that you have a PFIC.

Highlights

• Passive Foreign Investment Companies (PFICs)
• Income tax consequences
• Form 8621 preparation

Objectives

• Identify a Passive Foreign Investment Company.
• Recognize Form 8621 and PFIC taxation and reporting requirements.
• Identify the three different methods of PFIC taxation.
• Determine how to perform the PFIC tax calculations.
• Recognize when purging elections can be applied and how to use them.

Designed For

Tax practitioners advising U.S. taxpayers on foreign tax issues or preparing income tax returns for Americans abroad.