Where do I add 20% MTM gain in form 1040X for PFIC account?

sugnani · Post by **sugnani** » Sun Sep 04, 2011 7:58 pm

Hi Friends,

Do you guys know in which line of form 1040X do we add the 20% MTM gains for PFIC investments?

Also, if there is a loss, how to subtract it?

Thanks
Sk

tsanaha · Post by **tsanaha** » Sun Sep 04, 2011 11:12 pm

20% MTM gain tax does not go to 1040X. That means it will not be part of your adjusted gross income (AGI).

When you file amend state return (in case you have state tax), you will have to add it as other income (some state use Fedearl AGI).

sugnani · Post by **sugnani** » Sun Sep 04, 2011 11:26 pm

Are you sure? in the OVDI QA section it says you will have to include 20% taxes if you are using MTM method?

tsanaha · Post by **tsanaha** » Sun Sep 04, 2011 11:29 pm

I did not say "you do not pay 20% MTM tax"

It is not reported in 1040X. You pay it outside your AGI

sugnani · Post by **sugnani** » Mon Sep 05, 2011 12:41 am

Thanks Tsanaha. Can you please explain where do I add this 20% MTM gain..i mean on which form?

tsanaha · Post by **tsanaha** » Mon Sep 05, 2011 6:11 am

you may just use xsl file to do the work, and print it out to send IRS. make sure list all the Funds(Stocks) for each year of MTM gain

nelsona · Post by **nelsona** » Mon Sep 05, 2011 8:10 am

Technically, the MTM tax is supposed to be added to your income on line 21 as "other income", and the tax recalculated.

tsanaha · Post by **tsanaha** » Mon Sep 05, 2011 8:18 am

nelsona,

this might be true for state tax. in OVDI (that is what he is talking about), this may not be the case, as it is taxed on a fix rate 20% on MTM plus 7% for the first year of MTM tax.

nelsona · Post by **nelsona** » Mon Sep 05, 2011 10:18 am

Yes, you are correct. If using OVDI, one bypasses the 1040.

sugnani · Post by **sugnani** » Mon Sep 05, 2011 11:17 am

So does this mean that I just have to add this MTM 20% while writing the penalty check & send an attachment explaining this?

How about the loss. Say, if I had a profit of $150 in 2008, and then a loss of $200 in 2009. What do I do in this case?

Appreciate your earliest reply.

tsanaha · Post by **tsanaha** » Mon Sep 05, 2011 12:17 pm

OVDI FAQ gives a clear instruction to deal with MTM loss. For me, it is just so small (all the tax and gain/loss) comapared to FBAR penalty -- so I just took the loss myself -- make it as zero MTM. IRS might correct it though

sugnani · Post by **sugnani** » Mon Sep 05, 2011 12:37 pm

Thanks Tsanaha. I will do the same..just make it zero.

But you forgot to answer my first question - should I just add the MTM gain to the penalty check & attach a document explaining this?

tsanaha · Post by **tsanaha** » Mon Sep 05, 2011 12:55 pm

you just print out these MTM gain, with a letter to explain what you have done. write a check for the tax plus penalty (such as 20% accuracy penalty).

you may not have to include interest and FBAR penalty this time.. IRS will do the calculation and send you a bill

if you want to put all -- that is fine too -- they will do the certificatin of your accuracy.

good luck and peace in mind.