86 thoughts on “IRS says it’s “OK” to own PFIC’s through a “US” tax deferred account”
@ northernstar
Banks have the upper hand because the government gives them the upper hand — probably because the government listens and acts upon their demands. Now, what recent prime and egregious example do we have of this … hmmmm?
@nolongerauscitizen,
>I would love to take you up on your offer of PFIC help – not quite sure how one does that?
I assume get a site administrator to give you my email address.
>I take it that the gain made upon cancelling your PFICs was the real tax issue – rather than taxation on the ongoing yearly dividends?
Yes that’s right. Selling triggered the big tax. Problem is we had to sell eventual and it gets worse over time. Knowing what I know now I might have sold them in smaller chunks to kill AMT over time but the full analysis might have meant that it wasn’t worth it.
@USPersonForeigner
I, too, worry about what is coming up with immigrants and PFICs. Many of the privatized social security systems of Latin America use something akin to local mutual funds: the Chilean who privatized the system even told the House Ways and Means Committee this in 1997. Chile, Mexico, Argentina, Peru, Colombia, Bolivia, El Salvador might be among those affected.
@downtherabbithole
Good article, but I wish they would recognize that it is not so easy to hand everything over to a non-U.S. spouse. Even though I have an employer pension, I feel like I am back in the 1950s financially. Love your name: it is so appropriate.
@nolongerauscitizen,
I haven’t received anything from you. I assume that yopmail is some kind of substitution.
@Publius,
I think the bigger problem with PFIC is for US citizens that leave. I am guessing most immigrants go to other countries at a young age. We were probably older but still our assets in PFIC were small. If you get to your 60’s and have been saving diligently in a country outside the US you could easily have a large amount of money in something that the IRS will take at least all your gains if not some of the principle. Overcoming the at least 4% sec 1291 interest compounded daily on top of the highest marginal tax rates (39.6 + 3.8% from this year forward). If interest rates rise you can be totally killed.
@Neill, I don’t know if you are still reading this blog, but I saw that you were able to put your amateur coding skills to calculating pfics. We are kind of in a jam, and was wondering if you mind sharing your code. Thank you for reading!
in fact, anyone who might be able to help us with PFICS. we are the new, younger broke immigrants with PFICS and we just found out and are sleepless with fear, and would appreciate any help so we can code/calculate on our own.
@ northernstar
Banks have the upper hand because the government gives them the upper hand — probably because the government listens and acts upon their demands. Now, what recent prime and egregious example do we have of this … hmmmm?
@nolongerauscitizen,
>I would love to take you up on your offer of PFIC help – not quite sure how one does that?
I assume get a site administrator to give you my email address.
>I take it that the gain made upon cancelling your PFICs was the real tax issue – rather than taxation on the ongoing yearly dividends?
Yes that’s right. Selling triggered the big tax. Problem is we had to sell eventual and it gets worse over time. Knowing what I know now I might have sold them in smaller chunks to kill AMT over time but the full analysis might have meant that it wasn’t worth it.
Neill,
I tried — “nolongerauscitizen” email address gets “Delivery Notification Status: Failure”.
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@neill & @calgary411
My apologies – we live in a crazy world…
Thanks in advance @neill, I will try not to take up too much of your time.
@ neill – sorry having problems posing the address tenassite-8170@yopmail.com
@calgary411
Thanks!
@USPersonForeigner
I, too, worry about what is coming up with immigrants and PFICs. Many of the privatized social security systems of Latin America use something akin to local mutual funds: the Chilean who privatized the system even told the House Ways and Means Committee this in 1997. Chile, Mexico, Argentina, Peru, Colombia, Bolivia, El Salvador might be among those affected.
@downtherabbithole
Good article, but I wish they would recognize that it is not so easy to hand everything over to a non-U.S. spouse. Even though I have an employer pension, I feel like I am back in the 1950s financially. Love your name: it is so appropriate.
@nolongerauscitizen,
I haven’t received anything from you. I assume that yopmail is some kind of substitution.
@Publius,
I think the bigger problem with PFIC is for US citizens that leave. I am guessing most immigrants go to other countries at a young age. We were probably older but still our assets in PFIC were small. If you get to your 60’s and have been saving diligently in a country outside the US you could easily have a large amount of money in something that the IRS will take at least all your gains if not some of the principle. Overcoming the at least 4% sec 1291 interest compounded daily on top of the highest marginal tax rates (39.6 + 3.8% from this year forward). If interest rates rise you can be totally killed.
@Neill, I don’t know if you are still reading this blog, but I saw that you were able to put your amateur coding skills to calculating pfics. We are kind of in a jam, and was wondering if you mind sharing your code. Thank you for reading!
in fact, anyone who might be able to help us with PFICS. we are the new, younger broke immigrants with PFICS and we just found out and are sleepless with fear, and would appreciate any help so we can code/calculate on our own.