Rhode Island PFIC Filing Services

A foreign corporation generally meets the PFIC income test when at least 75% of its gross income is passive, or the asset test when at least 50% of its assets produce or are held to produce passive income, measured under the applicable rules.

Many foreign mutual funds and ETFs are PFICs, but each holding must be reviewed. A foreign bank account is not itself automatically a PFIC. Indirect ownership and investments within foreign savings or retirement arrangements can require additional analysis.

U.S. persons may need a separate Form 8621 for each PFIC for annual reporting, distributions, dispositions or elections. Exceptions depend on ownership and other facts; no distributions does not necessarily mean no filing obligation.

• PFIC analysis and determination
• Form 8621 preparation and filing
• Review of foreign mutual funds and investment accounts
• PFIC gain and distribution calculations
• Mark-to-Market and QEF election analysis
• Multi-year PFIC reporting assistance
• Coordination with FBAR and FATCA reporting requirements
• Expatriate and immigrant tax compliance support

A QEF election generally requires suitable information from the fund, including a PFIC Annual Information Statement. When available and properly made, the election generally results in annual inclusion of the shareholder’s share of ordinary earnings and net capital gain, even without a cash distribution.

We review whether the required information is available, election timing and whether prior PFIC years require additional analysis. A QEF election is not automatically available for every foreign investment.

A mark-to-market election is generally limited to qualifying marketable stock. It can require annual recognition of unrealized gains as ordinary income, with losses subject to limits based on prior inclusions.

We review eligibility, market qualifications, election timing and the effect on prior years before comparing this approach with other PFIC treatments.

Under the default Section 1291 rules, an excess distribution generally includes the portion exceeding 125% of the average distributions for the preceding three years, or the shorter applicable holding period. Gains on a disposition are generally treated as excess distributions.

Amounts are allocated across the holding period. Portions allocated to prior PFIC years can be subject to special tax and interest charges. We review purchase dates, basis, exchange rates, distributions and sales records to calculate the applicable treatment rather than assuming ordinary capital-gain rates.