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  1. 1296 states that the first year of MTM election is treated under 1291, which assesses the income over the investor’s holding period (such as if less than 1 year).

  2. @Sunil, I am on vacation this week. I will blog about this sometime when I get back.

  3. Phil — what about dividends/distributions ? Are they added in Form 8621, then become ordinary income, or do they go on Schedule B ? In one way it doesn’t matter as they are all taxed at same rate, but what is the right way to do it ?

  4. I have honestly tried to understand FAQ 29 and section 1296 but I don’t seem to be able to figure out the carrying forward and backward of losses. In plain terms, if you have a loss in year ’06, ’07, ’08 and gains in ’09 and ’10, can you offset those gains in the latter years with the ones in the former?

    Can you only do the offsetting within a given PFIC? Or can you not do this at all?

    Thanks for any illuminating tips.

  5. Mark,

    The way I’m approaching the PFIC topic is to start simple — with a disposition where the taxpayer buys and sells in a single calendar year. Once I have beaten that topic to death 🙂 I will move on to dividends and distributions. It’s on the list of topics. In fact, dividends and distributions will be next.

    Phil.

  6. Phil — what about dividends/distributions ? Are they added in Form 8621, then become ordinary income, or do they go on Schedule B ? In one way it doesn’t matter as they are all taxed at same rate, but what is the right way to do it ?

  7. Deborah,

    The PFIC stuff is one of those topics you “know” off the top of your head but it takes a metric ton of work to wade through the Code and REALLY get the right answer.

    I’m going to wade through the Code now and figure out what’s going on with the stuff you mentioned in your comment. You may be right. And I appreciate your comment and question. I like the fact that the interwebs are a great big mastermind and quality control system. 🙂

    Phil.

  8. I’m still not sure about this. The way it reads, part III of F8621 only appears to report unrealized gain or loss.

    In this example, the taxpayer does not have any PFIC stock left at the end of the year. So wouldn’t the FMV and cost basis both be zero?

    Are you saying that realized and unrealized gains and losses are reported in the same way on Form 8621? What if the result in your example had been a loss?

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