Let’s say you own PFIC stock.  (Hint:  foreign mutual funds almost certainly are PFICs.  So even normal people can own PFICs, to their absolute horror.) You sell your PFIC stock.  Better yet, you sell at a profit.  ”Buy low, sell high!”  How hard can that be?  :-)  To make this example extremely simple, I am [...]

In blog posts here and here I discussed the treatment of disposition gain by a taxpayer who sells a PFIC.  In those two blog posts I assumed that a taxpayer bought a PFIC and sold it in the same calendar year, and I further assumed there were no distributions by the PFIC.  (I am trying [...]

We do a lot (and I do mean a LOT) of work with PFICs — Passive Foreign Investment Companies. As a result we have a lot of stuff on this topic stored in our collective brains at the firm. We also have fiercesomely complex spreadsheets designed by David, and tweaked by David, Elena, and Debra. [...]

Our consistent advice to U.S. taxpayers is “Sell all of your foreign mutual funds.” Foreign mutual funds are almost always Passive Foreign Investment Companies — PFICs. We tell people to get rid of foreign mutual funds and buy individual stocks and bonds. The advice has nothing to do with investment strategy. It has everything to [...]

Correspondent C (thanks!) read my prior blog post about how the excess distribution rule would treat recognized gain on a purchase and sale in the same year, and pointed me to Section 1291(b)(2)(B). Wouldn’t that seem to indicate that we should treat the gain as capital gain rather than ordinary income? Fact recap Remember we’re [...]