A Canadian mutual fund that provides PFIC/QEF statements

[sunnysga]

Sarahp - do I feel your pain! I just looked at it - because I will have to fill it as well, and it just makes me angry that this has to be soooo difficult! I keep hitting a brick wall -just when I figure something out, another roadblock! (OK - that's my vent.)

So to get back to the question. I use TaxAct, so I have been playing - trying different strategies to see how the value (as reported on Fidelity statement under Net Capital Gain) ends up on 1040, line 13 where I think ultimately it needs to end up.

There were 2 ways that I could do it, both in TaxAct (sorry I don't have your program).

1. Was able to go to Form 2439 which had me complete "Notice to Shareholder of Undistributed Long-Term Capital Gains". I put the value on the form into line 1a. This value is listed on Sched D, line 11 (Which when I populate that line - it automatically gets pulled to Form 1040, line 13.)

OR

2. Filled out in TaxAct a Schedule K-1 (Form 1041) and put the $ value on line 4a which is Net Long-term capital gain. This value is listed on Sched D, line 12 (Which automatically gets pulled to Form 1040, line 13.)

I have heard the term "Schedule K" kicked around in my research on PFICs so using this form "feels" more correct to me. That's about as scientific as I can get!

I truly feel that as long as it shows up on Line 13 of Form 1040, on which the income tax is based, (and of course give them my best attempt at Sched D as backup), then they will have the tax money they are expecting. I don't know what more we can do.

What do you think?

[sunnysga]

Doing more research on where to put Net Capital Gains from QEF election onto Schedule D. Another option:

Use Form 8949. Go to Part II to report Long-term gain and select "F" for not having received a 1099-B. Put the capital gain from the PFIC statement into Form 8949 column (d) "Proceeds".

Lots of info on the internet re: Form 8949.

I think I will select this method to report my capital gains to make it flow to Form 1040 line 13.

[sarahp]

Hi Sunnysga,

Thanks for your reply. I was also looking at form 8949 in between my earlier post and reading this, so I hope that means we're on the right track! I agree with you that as long as the numbers end up on Schedule D and more importantly form 1040 in the right place, it is probably ok.

I totally agree with your rant, too... I feel the same way. Every time I think I've figured something out, something else crops up to make me question my previous conclusion. And in my family's case, at least, all of this effort is for very, very little income ($22.40 on the form 8621 I am currently working on) and little (if any, in some years) tax owed to the US when all is said and done.

Thanks again - it helps to "talk" to someone else struggling with the same forms at the same time. Good luck!

Sarah

[sarahp]

Hi again,

I think you are right about Form 8949. I found the following paragraph in the instructions for that form on the IRS website:

"Other gains or losses where sales price or basis is not known. If you have another gain or loss for which you do not know the sales price or basis (such as a long-term capital gain from Form 8621), enter a description of the gain or loss in column (a) on a Part I with box C checked or Part II with box F checked (depending on how long you held the property). If you have a gain, enter it in columns (d) and (h). If you have a loss, enter it in columns (e) and (h). Complete any other columns you can."

Now wouldn't it have been more helpful if the instructions on form 8621 told us to enter the capital gains on Form 8949 instead of in Schedule D and left us to do the digging?

[sunnysga]

Great find! I feel even more comfortable now about the direction we are heading using form 8949. Thanks for that tidbit.

[sarahp]

Does Tax Act let you directly edit any of these forms? (8621, 8949, Schedule D?) Now that I've figured out what I want to do with the numbers, I can't get TurboTax to let me actually do it, and I'm trying to decide if it's worth switching software this late in the game or if there's a workaround.

In any case, it seems like I should switch to Tax Act next year - it's pretty well-recommended on this forum.

[sunnysga]

Yes TaxAct lets you complete all these forms by going through the "forms" menu. (In fact, to complete Form 8621, you have to go through the Forms menu - the Q&A won't do it for you.)

[sunnysga]

If you do form 8621 in TaxAct, see my post under "Tax software for expatriates" where I detail how TaxAct tech support gave me how to work around doing more than five 8621 forms in TaxAct (which is the max # for their software because apparently it is the max # allowable by the IRS to file electronically). Of course, you can paper submit as many 8621s as you like!

[sunnysga]

Found this in TaxAct support for how to enter Capital Gains and losses on Schedule D.

http://www.taxact.com/support/601/sched ... Value=8949

It has directions. Create 1099-B for a transaction. TaxAct will populate 8949, which will populate Schedule D (which then populates 1040).

[sarahp]

Thanks! I found a similar way to force TurboTax to generate the correct 8949, which then populates line 10 of Schedule D. I may try TaxAct next year, but I've already paid for TurboTax this year so I'm glad to not have to switch at this stage.