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PFICs-Canadian Mutual Funds

 
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jenfin



Joined: 12 Mar 2011
Posts: 37
Location: Canada

PostPosted: Sun Mar 13, 2011 5:09 pm    Post subject: PFICs-Canadian Mutual Funds Reply with quote

Can't seem to find the thread but know there is one. Have spent a full week looking through the form 8621, its instructions and the Int. Rev Code. and trying to see the damage using the mark to market method in respect to the many mutual funds I have owned. Much is incomprehensible but what I deduce (hope I am wrong) is it is perverse. Any year you have a gain it is taxed as ordinary income, any year you have a loss you cannot take a loss beyond any gains you reported in prior years. This suggests there is no loss carryforward...In otherwards if you had a big loss say in 2008 and the fund recovered in 2009/2010 you might not get to take any loss in 2008 (if no prior years gain) and yet in 2009 and 2010 you are taxed on the gain which only got you back to pre-2008 levels. Could this be true...Surely someone is pushing back on this.

Also if the whole purpose of this treatment is because the mutual fund might not distribute all their earnings/cap gains but if this is not the case should PFIC treatment even apply? Note: I have been reporting mutual fund distributions on Sched. B & D. If they didn't/don't require PFIC treatment should they have required Trust (3520) treatment?
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