PFIC after moving to the United States

ael · Post by **ael** » Thu Apr 14, 2016 2:23 pm

I held a Canadian mutual fund since 2012, and did not make a QEF or M2M election at the time (since I was not a US person). I moved to the United States in 2015 and then sold the mutual funds. Am I stuck with using the excess distribution method for 2012-2015? The rules for retroactive election don't appear to apply. Thanks!

nelsona · Post by **nelsona** » Thu Apr 14, 2016 2:47 pm

If they were not in a TFSA or RESP, they would have been subject to deemed disposition, so, at the very least, your new cost basis would be the deemed dispo value, per IRS Rev Proc 2010-19.
Then, their treatment is like any other PFIC you bought and sold in the same year.

ael · Post by **ael** » Thu Apr 14, 2016 4:41 pm

That makes sense. And for mutual funds I sold in 2015 before moving to the US (filing full-year), I would have to use the excess distribution method, since there was no deemed disposition?

nelsona · Post by **nelsona** » Thu Apr 14, 2016 5:04 pm

Sure.
But you would then be able to use 9as in the first instance) the Cdn tax from the actual disposition against the US tax.

neither of the cases should present a huge tax problem, since you disposed of these in 2015. Where it gets problematic is when you have NOT disposed of such mutual funds and are living in Canada and no disposition (real or deemed) as occurred in Canada's eyes.

The year you move actually has favourable conditions for starting PFIC reporting.

nelsona · Post by **nelsona** » Thu Apr 14, 2016 5:13 pm

... and remember, you are always allowed to make your filing status dual-status (or even 1040NR in some cases) for 2015, which would eliminate PFIC consideration altogether except for funds you held when you moved.