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

Determining Which Assets Require PFIC Reporting, Calculating Tax and Interest, Leveraging QEF Elections

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, January 5, 2017
Recorded event now available


This webinar will furnish tax advisers with a thorough and practical guide to the reporting of investments in a passive foreign investment company (PFIC) on IRS Form 8621. The panel will identify those investments that require PFIC reporting, outline the various elections available to taxpayers holding interests in PFICs and discuss the tax implications of those elections, and will provide an example of a completed Form 8621 to illustrate reporting requirements.

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 has 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

  1. Identifying PFIC investments subject to filing requirements
  2. Filing thresholds and key exclusions
  3. Elections available to taxpayers
    1. Mark-to-market
    2. QEF election
  4. Completing Form 8621

Benefits

The panel will discuss these and other important issues:

  • Types of foreign investments that must be reported as PFIC holdings
  • Calculating the “tax and interest” on PFICs under IRC 1291
  • Available elections to opt out of PFIC treatment
  • Tax effects of these elections, from a tax due and a reporting standpoint
  • Completing a Form 8621 to report PFIC holdings, including reporting elections

 

Learning Objectives

After completing this course, you will be able to:

  • Identify holdings that require reporting as a PFIC on IRS Form 8621.
  • Recognize the elections available to minimize the impact of PFIC holdings.

  • Discern the advantages and disadvantages of making PFIC elections.

  • Ascertain the tax impact of PFIC elections.

  • Determine the applicable exceptions for rent and royalty income on Foreign Personal Holding Company (FPHC) income.

  • Establish the requirements and resulting tax treatment of making a mark-to-market or QEF election.

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.


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Recordings

CPE On-Demand

Includes video streaming of full program plus handouts (available within a week of the live webinar).

Strafford is a NASBA-approved CPE provider for On-Demand webinars.

This program is eligible for 2.0 CPE credits.

  • Field of Study: Taxes.
  • Level of Knowledge: Intermediate.
  • Advance Preparation: Printing and reviewing Program Outlines and materials.
  • Teaching Method: Seminar/Lecture.
  • Delivery Method: QAS Self-Study.
  • Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules; supervisory authority over other preparers/accountants. Knowledge and understanding of passive foreign investment company (PFIC) rules, including taxation of PFICs and filing requirements; familiarity with IRS Form 8621.

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