The IRS has been focusing on the reporting requirements of a PFIC (Passive Foreign Investment Companies) and making investing in foreign countries more complicated. Most people have no idea what qualifies as a PFIC, and it is all too easy to declare income from PFIC’s incorrectly. In order for an investment to be a PFIC it needs to be considered a ‘passive corporation’. It passes this test if it meets one of the following requirements:
- 75% or more of the gross income of the investment is passive income
- 50% of assets held by the investment produce passive income, or is held for the production of passive income.
- Most Non-U.S. Mutual Funds fall under this definition and will be subject to this onerous tax. Additionally, even if you only own these investments, and don’t sell any, you may still have to report numerous annual forms listing their values.
We can help you:
- We can analyze your investment portfolio and can identify all PFICs held in your holdings.
- We can assist in reducing your PFIC exposure using the best methods available.
- Help minimize the effective tax on newly acquired PFICs.