Fondos de inversión – PFIC

A Passive Foreign Investment Company is any foreign cor­poration that has either: (1) 75% or more of its gross income classified as passive income, or (2) 50% or more of its assets are held for production of passive income.

While there are a few exceptions to the previous rules, most foreign mutual funds, pension funds and money market accounts would be good examples of PFICs.

PFIC must be reported annually in Form 8621. You can choose the Mark-to-Market option. This method allows the shareholder to report the annual gain in the market value (i.e. unrealized gain) of the PFIC shares as ordinary income on the “other income” line of their Tax Returns. Unrealized losses are only reportable to the extent that gains have been previously reported. The adjusted basis for PFIC stock must include the gains and losses previously reported as ordinary income.

Upon the sale of the PFIC shares, all gains are reported as ordinary income where losses are reported on Schedule D.

TAXPAYERS MUST LET US KNOW in advance IF THEY OWN A PFIC.