Qualified Electing Funds (“QEFs”) Receiving Qualified Dividend Income

Question: If a qualified electing fund (“QEF”) election is made for a passive foreign investment company (“PFIC”), and if the PFIC receives qualified dividend income (“QDI”), can the QEF report the QDI to its U.S. shareholders as net capital gain? Answer: Unfortunately, no. A QEF cannot report QDI that it receives as net capital gain. If a U.S. shareholder elects to treat a PFIC as a QEF, the U.S. shareholder is taxed currently on its... Read more →