Form 8621 PFIC Reporting: Navigating the Highly Complex IRS Passive Foreign Investment Company Rules

 

Strafford Publications recently requested that I present on the topic of PFICs. The presentation is titled Form 8621 PFIC Reporting: Navigating the Highly Complex IRS Passive Foreign Investment Company Rules. The presentation will be made predominantly to attorneys and CPAs, with clients holding foreign investment assets. A description of the presentation is below: 

 

Description

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 required to file 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 carries its own tax and reporting consequences, and tax advisers must have a thorough knowledge of the tax impact of these elections in advising their clients.

 

Listen as our panel of expert advisers provides a thorough guide to reporting PFIC ownership shares, including determination of what assets must be reported as PFICs, performing the difficult tax calculations required by the PFIC reporting regime, and understanding the elections available to opt out of PFIC reporting.

 

Outline

  • Identifying PFIC investments subject to filing requirements

  • Filing thresholds and key exclusions

  • Elections available to taxpayers

    Mark-to-market

    QEF election

  • Completing Form 8621

  •  

Benefits

The panel will discuss these and other important issues:

  • What types of foreign investments must be reported as PFIC holdings?

  • How to calculate the “tax and interest” on PFICs under IRC 1291

  • What are the available elections to opt out of PFIC treatment?

  • What are the tax effects of these elections, from a tax due and a reporting standpoint?

  • How to fill out a Form 8621 to report PFIC holdings, including reporting elections

 

Learning Objectives

After completing this course, you will be able to identify those investment holdings that require reporting as a PFIC on IRS Form 8621. You will have a detailed understanding of the elections available to minimize the impact of PFIC holdings on filing, you will know the specific requirements for making the elections, and you will be able to discuss the tax impacts of those elections. You will also know what a properly completed Form 8621 should look like.

 

Faculty

Steven Flynn, Partner
W.L. Dueck & Co., Vancouver, BC, Canada

Mr. Flynn concentrates in the area of Canadian and US cross-border tax. His practice includes US and Canadian income tax planning and compliance for both individuals and businesses. He provides income tax advice on US investment and operations in Canada, Canadian investment and operations in the US, investment in US and Canadian real property, employee or individual emigration and/or temporary relocation and the Canada-US Income Tax Treaty.

 

Mehrdad Ghassemieh, Partner
Harlowe & Falk, Tacoma, Wash.

Mr. Ghassemieh's practice focuses on assisting companies of all sizes, in all business and tax matters, including advising closely held businesses to establish new business entities, advising on regulatory and tax matters, succession planning, and tax efficient planning for purchases or sales of existing businesses. He also provides tax consulting services to clients with international operations. His clients include both U.S.–based companies that have expanded abroad and foreign companies with U.S. ties. He also consults with U.S.–based exporting companies to determine whether they qualify for IC–DISC tax incentive benefits, and assists in both implementation and maintenance of IC–DISC structures.

 

William R. Skinner, Partner
Fenwick & West, Mountain View, Calif.

Mr. Skinner focuses his practice on U.S. international taxation, with a particular emphasis on tax planning and international corporate transactions. He has broad experience in international tax issues for U.S. corporations, foreign corporations, and high net-worth individuals, and has represented clients across a variety of industries. He teaches international taxation as an adjunct professor in San Jose State University’s MST program, and speaks and writes frequently on international and corporate tax issues.

 

More information at: https://www.straffordpub.com/products/tpct2aerna?trk=ZDFCT

Presentation Materials at: http://media.straffordpub.com/products/form-8621-pfic-reporting-navigating-the-highly-complex-irs-passive-foreign-investment-company-rules-2017-01-05/presentation.pdf

 

IRS CIRCULAR 230 NOTICE: ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY HARLOWE & FALK LLP TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.