Backfiling 8621 ?

[blairgoates]

Can you backfile a mark-to-market election using form 8621 or are you stuck treating it as a Section 1291 fund...or something else?

In plain talk..what do you do when you have not filed and plan to go back six years and have unregistered mutual funds for all those years ?

Thanks..and I apologize if this has been addressed in another thread.

[blairgoates]

Ok...I think I found an answer to part of my question, ie

"On April 6, 2010, the IRS published Notice 2010-34 which provided that PFIC shareholders not otherwise required to file Form 8621 annually before Sec. 1298(f)’s enactment would not be required to file an annual report under Sec. 1298(f) for tax years beginning before March 18, 2010."

If you are not required to file form 8621 for tax years beginning before MARCH 2010 then how do you report Cdn mutual funds for periods before that date ?

Thanks....

[nelsona]

The same way you reported them in Canada: distributions, and gains triggered by sales.

[jenfin]

I'm not familiar with 1298(f) or did not think it applied. I am a cdn resident, Cdn/us citizen. I thought it was not that I wasn't required to file 8621s, I thought it was simply that I didn't have a clue that a Canadian mutual fund was anything but a mutual fund, not a PFIC. I have been spending alot of time preparing 8621 information and found that markets have dropped enough this year that it saves me money by selling them now and filing the 1291 next year....rather than attempting a mark to market for 2010.

[madhoa]

I'm a little confused. If there are distributions and dispositions, then you are required to file form 8621. That IRS notice basically says that you if are not required to file form 8621 (i.e. you have no distributions or sales), then you don't have to file it simply for reporting purposes.

[blairgoates]

Madhoa, I'm glad I am not the only one confused....

Bottom line..if there are distibutions in past years do I have to file 8621 and can I mark to market ? If I do not have to file 8621 then I presume I report distributions as I do for Cdn taxes.

Is there a definitive answer ?

Thanks

[madhoa]

If there are distributions or sales, then you are required to file form 8621. You cannot mark to market unless you first bought the PFIC within the period in question (i.e if you bought a particular PFIC 10 years back and you're backfiling 4 years of returns you cannot do MTM). You CAN do MTM if you first bought the PFIC within the past 4 years. There are some exceptions and qualifications, but thats it generally. If your MTM election is not timely, you have to treat it as a section 1291 fund.

[blairgoates]

In summary, as I understand it, if you are backfiling then the election for mark to market is not timely and you must treat distributions from a pfic as a Section 1291 fund... So if you received a distibution in 2006 then you determine the excess amount, prorate it back to beginning of fund, apply high rate of tax for each year, and calculate daily interest to the current date on the taxed amounts for each year ....OUCH and complicated !

How the !X!# do you calculate the daily interest ? Does anybody have a XLS worksheet they would be willing to share ?

Has anyone tried to make a mark to market election in a case like this and have it denied ?

Thanks

[madhoa]

You can certainly try to use MTM. The IRS may be happy enough to get your old tax return that they might not care about the interest charge for previous years unless we're talking about really large sums.