8621 PFIC TFSA Dividend Mutual Fund

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hello3520
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Joined: Tue Apr 01, 2014 4:34 pm

8621 PFIC TFSA Dividend Mutual Fund

Post by hello3520 »

I am putting together form 8621 for a mutual fund held in my TFSA.

1. Can I make a Mark to Market election if the fund paid out dividends?

2. Where do I declare the Dividends if I make the Mark to Market Election? Do I just fill out part IV of the 8621?

Because there is no place in part IV for dividends makes me think that I can't do a Mark to Market election.
nelsona
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Post by nelsona »

Others will chime in, but the dividends would be reported as income on your 1040 in the normal way. mark-to-market involves your holdings, not the dividends they generated. Those are already taken care of on schedule B.

That is how I interpret it, anyways.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rlb
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Post by rlb »

That's how I did it, back before I dumped my PFICs. The only issue I would think would be, is if you used the dividends to purchase more shares of the PFIC. Each purchase of the PFIC, even automatic reinvestment, is a separate lot of the stock, and requires a separate 8621 for that lot. If you had automatic quarterly reinvestment, that would be a lot of forms.
nelsona
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Post by nelsona »

Are you sure rlb? The reinvested dividends would simply be added to the existing pile, with an adjusted cost basis, no?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rlb
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Post by rlb »

nelsona, no I'm not absolutely sure. Fortunately, I avoided that precise situation. I did have multiple lots of a single PFIC (a couple of them in fact), though just as investments, not in a TSFA. I always treated these as separate investments, with separate 8621s. And I only had them for two tax years; after the first, when I realized what a problem PFICs would be, I sold them in the second year.

In the US (we were there 34 years), we always used FIFO for lot identification. I am not sure if the US allows the use of average cost basis, and it would certainly make a mess on their forms where you need to specify purchase dates. However, I think Canada requires it.
nelsona
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Post by nelsona »

If you are marking to market your entire fund, no need to divide them. Same if you are selling all stock purchased at different times.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
hello3520
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Joined: Tue Apr 01, 2014 4:34 pm

Post by hello3520 »

I had reinvest dividends on several mutual funds. This is in a TFSA so there is no FIFo tracking or any kind of real statement other then manually tracking the shares in a spreadsheet myself.

I was not going to separate them. I sold all shares at the same time and was going to enter the sale FMV (line 13a) and the adjusted basis (cost) (line 13b).

I wish I had switched funds a month earlier in December 2012 so the old gains wouldn't be taxable when I became a US resident in 2013.
nelsona
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Post by nelsona »

... and you wouldn't have had to bother with pfic and 3520, etc for 2013.

I was giving that advice years ago, too bad you came here too late.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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