Discussion:PFIC shareholder election statement
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Discussion Forum Index --> Tax Questions --> PFIC shareholder election statement
| 11 April 2007 | |
| Any information on the election statement that a shareholder in a PFIC (passive foreign investment company)should file to preserve capital gain treatment on distributions? Not sure where to start looking but am told it exists. Thanks. | |
| April 12, 2007 | |
| Fishy,
I did a web search on this same issue for a tax return last year. I found this article helpful http://www.offshorepress.com/AICPA/form8621.htm My client also had included a nice 2 page write up from Deloitte Touche that came with their info. I filed the Form 8621 with the return. Elected to treat the PFIC as a QEF. I completed a portion of Part II. And added the taxable income to my client's 1040. Good luck! | |
Rganer@gggcpa.com (talk|edits) said: | 8 October 2007 |
| If an individual taxpayer is a limited partner in an LP that files an 8621, is the individual required to also file 8621? The K1's I receive are not clear. | |
| 10 October 2007 | |
| It is my understanding that the income from the PFIC is already reflected on Schedule K-1. Thus, you do not need to carry this to the applicable schedules of the tax return. Can someone please confirm??? Thanks... | |
Death&Taxes (talk|edits) said: | 5 September 2009 |
| Now here is a horror show: the advisers for the hedge fund write 'please be advised that your clients must complete a Form 8621 per the instructions in the XXX LLC Schedule K-1. There is no difference in filing from the prior year expept that the number of Passive Foreign Income Corporations (PFICs) has increased from 4 to 18 this year. Please instruct your clients to consult with their tax advisor.'
I note in the K-1 package a supplementary statement saying: "Each PFIC described above was acquired for cash. The first US shareholder making a QEF election for a PFIC is required to include income currently under IRC Section 1293 and to file Form 8621. Your distributive share of such amount, if any, has been included in your K-1. The Internal Revenue Service has clarified formally and has changed instructions to Form 8621 to clarify that no additional Form 8621 reporting is necessary under these facts. Therefore, XXX LLC has not provided Form 8621 or the information necessary to prepare Form 8621 to its partners." The only rub with that statement is that there are no PFIC 'described above.' But in the package are 18 pages giving instrucutions for the 8621 and stating that the partnership 'has not made a Qualified Electing Fund election with respect to such PFIC after performing an analysis of the tax consequences of making such an election." I note that Form 8621 is not a listed attachment on the 8453, which means this large, complicated return cannot be efiled. | |
| 7 September 2009 | |
| D&T, I'm not clear from your post if you are just venting or if you are confused. I have a client with tens of these nightmares. The K-1s can be literally 20 pages long with all the different disclosures and required filings. When something is inconsistent, I have questions, or it is simply not clear, I tell my client that I need clarification and I send the preparer an email. I am responsible as the preparer of the individual tax return, but the preparer of the partnership return needs to give me appropriate information. Recently I gave my client the "learning about the law" estimate and "filling out the form" estimate provided by the IRS for the 8621 so that he would know that my asking the question instead of recreating the wheel saves him a lot of money.
It's interesting that they told you that the income was already included in the K-1. I specifically was told that I had to add it to Sch B. Maybe what they are saying is that the election has already been made by the partnership on all partners' behalf. (I believe that I read that that was an option). | |
Death&Taxes (talk|edits) said: | 7 September 2009 |
| I am venting, Jessica, and you are right, this K-1 has 25 pages. This return has been sitting since late March waiting for this K-1 to arrive. First the client emailed a pdf of the first page so I had to tell him to send the entire package, and included with it was a copy of the email mentioning the preparation of the 8621.
I've asked my client to find out why that one statement about the partnership including the income is included, but my guess is that it is boilerplate since no PFIC is listed on it. Of course, my client is a doctor employed by a big Pharma firm!!! | |
ValerieMiamiNYC (talk|edits) said: | 28 September 2009 |
| All of your answers on the Form 8621 regarding filing requirements.
If you are required to file and you have a gazzillion stmts(ok 50 from one fund and then another handful)- if it is Section 1291 reporting ( 8621 part IV ) - you only have to fill out the form for the first pfic and then attach the details for the rest of the pfics to that one form! Sure will save me a ton a work and the clients a ton of fees - so that is how I will disclose the information. BEGINNING OF BIT FROM IRS WEBSITE: Interest holder of pass-through entities. The following interest holders must file Form 8621 under the circumstances described above: A U.S. person that is an interest holder of a foreign pass-through entity that is a direct or indirect shareholder of a PFIC, A U.S. person that is considered (under sections 671 through 679) the shareholder of PFIC stock held in trust, and A U.S. partnership, S corporation, trust (other than a trust that is subject to sections 671 through 679 for the PFIC stock), or estate that is a direct or indirect shareholder of a PFIC. Note. U.S. persons that are interest holders of pass-through entities described in 3 above must file Form 8621 if the pass-through entity fails to file such form or the U.S. person is required to recognize any income under section 1291.
Complete Form 8621 for the first PFIC and, in an attachment, provide the information required on Form 8621 for each of the other PFICs in the chain. END OF BIT FROM IRS WEBSITE
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