Blog article dated Jan 8, 2014 - with flow chart to make it easier to understand...
http://intltax.typepad.com/intltax_blog ... -8621.html
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Interesting: IF the total value of a PFIC owned is 25K or less (or 50K if filing jointly) one does not need to file form 8621. This, at least, should be good news for some.
New rules for PFIC filing.
Moderator: Mark T Serbinski CA CPA
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CdnAmerican
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- Joined: Tue Aug 30, 2011 12:15 am
Wow - that does seem like potentially a big deal for some. It looks like the ruling is that the TOTAL amount of all PFIC's owned by a person/couple needs to be < $25K/$50K for this change to apply. Still, it's a nice gesture by the IRS to leave some of us guppies alone, perhaps :)
Not a professional opinion.
Hi All,
I don't think this is the good news we were hoping for. This just means that if you haven't made a mark to market election or a QEF election (ie. you're subject to the excess distribution default regime) and the value of all PFICs is below $25k, then you don't have to file the form in a year when you haven't sold any shares. This just means that when you do sell the shares, the usual 39.6% tax rate, and interest regime applies.
The way I see, anyone filing 8621 would do so in order to make a mark-to-market or QEF election, so this wouldn't help.
I don't think this is the good news we were hoping for. This just means that if you haven't made a mark to market election or a QEF election (ie. you're subject to the excess distribution default regime) and the value of all PFICs is below $25k, then you don't have to file the form in a year when you haven't sold any shares. This just means that when you do sell the shares, the usual 39.6% tax rate, and interest regime applies.
The way I see, anyone filing 8621 would do so in order to make a mark-to-market or QEF election, so this wouldn't help.
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CdnAmerican
- Posts: 245
- Joined: Tue Aug 30, 2011 12:15 am
I have a PFIC where I filed Market-to-Market in previous years. Fidelity is only now providing statements to go along with PFICs so investors can elect QEF. Now that we finally have this resource, can I just switch my M2M to QEF or do I have to first, what is it called ... "purge the taint"? Same goes with TFSA and RESP (that I see now I should have filed 8621 - never did before - just reported the income and filed 3520/A). Given the IRS clarification that we can now just start filing 8621 beginning tax year 2013, can we elect QEF now on PFICs even though they have been established for a few years already?
I have searched all over for whether QEF elections can now be made - despite investments being more than 1 year old - now that Canadian investment companies are just this year providing statements that allow us run-of-the-mill investors to select QEF and just attach their statements to Form 8621.
If anyone knows the answer to my post earlier, I would be very appreciative.
I just don't know where else to turn for this answer.
If anyone knows the answer to my post earlier, I would be very appreciative.
I just don't know where else to turn for this answer.
Hi Sunnysga,
You raise a good question. I have read in the instructions on form 8621 and it says that once the mark-to-market election is made, you must continue making the election. It would make sense that one should be able to change the election to QEF and just adopted the last cost basis from mark-to-market. I'd be tempted to just go ahead and change the election.
Another option is you could sell your mutual funds (or state that you have), and then buy them back and then make a QEF election. Note that on the new 8621 form (2013) you're allowed to make up a Reference ID number, as long as it is different from previous years when you had mark-to-market, you should be OK.
To be safe, you could do a fund "switch" to a very similar fund, then select the QEF election. Other than the above, that's all I can think of.
Cheers!
You raise a good question. I have read in the instructions on form 8621 and it says that once the mark-to-market election is made, you must continue making the election. It would make sense that one should be able to change the election to QEF and just adopted the last cost basis from mark-to-market. I'd be tempted to just go ahead and change the election.
Another option is you could sell your mutual funds (or state that you have), and then buy them back and then make a QEF election. Note that on the new 8621 form (2013) you're allowed to make up a Reference ID number, as long as it is different from previous years when you had mark-to-market, you should be OK.
To be safe, you could do a fund "switch" to a very similar fund, then select the QEF election. Other than the above, that's all I can think of.
Cheers!
Thank you kindly for your suggestions. Although the threat of penalties if we do it wrong are nerve-wracking, at some point, I think sometimes we just have to take a deep breath and just do the best we can (especially when it seems unreasonable that the average person would have NO idea how to even interpret the terminology in these forms.)