International Tax Blog

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 →

PFIC Mark-to-Market Election Charts & Videos

Today we added 12 new situational charts to andrewmitchel.com dealing with mark-to-market elections for PFICs. We also uploaded 12 new videos to our YouTube channel that briefly discuss each of the new charts. The charts and videos include: Gain from MTM Election in Year After Acquisition Is Included in Unreversed Inclusions Reg. 1.1296-1(a)(3)(iii), Ex. (Video) MTM Election Made in First PFIC Year, Which Was After Acquisition Year Reg. 1.1296-1(c)(7), Ex. 1 (Video) Gain Recognized in... Read more →

Flowchart - PFIC Mark-to-Market Elections

Today we published a flowchart on our sister website, Tax-Charts.com, regarding the application of mark-to-market (“MTM”) elections for passive foreign investment companies (“PFICs”). A PDF of the PFIC MTM flowchart is included here. We now have twelve free flowcharts at Tax-Charts.com: Section 83: Rev. Proc 93-27 Taxation of Profits Interest Section 302: Distribution in Redemption of Stock Section 351 Exchange: Transfer to Corporation Controlled by Transferor(s) Section 351(g): Nonqualified Preferred Stock Section 357: Assumption of... Read more →

Application of PFIC Look-Through Rules to Foreign Corporation with U.S. Subsidiaries

A passive foreign investment company (“PFIC”) is generally defined as any foreign corporation if 75 percent or more of its gross income for the taxable year consists of passive income, or 50 percent or more of its assets consists of assets that produce, or are held for the production of, passive income. Code §1297(c) contains a look-through rule that provides that if a foreign corporation owns, directly or indirectly, at least 25 percent of the... Read more →

Recognition of Losses on Dispositions of PFICs

Proposed regulations issued by the IRS over 20 years ago are a source of confusion for some individuals with investments in passive foreign investment companies (“PFICs”). A PFIC is defined as any foreign corporation if 75 percent or more of its gross income for the taxable year consists of passive income, or 50 percent or more of its assets consists of assets that produce, or are held for the production of, passive income. The quintessential... Read more →

Charts of Examples in New PFIC Annual Filing Requirement Regulations (Form 8621)

As discussed in a post last week, the IRS has released Treas. Reg. §1.1298-1T, temporary regulations regarding the annual filing requirement (Form 8621) for Passive Foreign Investment Companies (“PFICs”). The regulations include four examples which apply the filing requirement rules and exceptions. We have created charts for each of the examples. Images of the charts are shown below and links to PDFs of the charts are also shown: Treas. Reg. §1.1298-1T(g) Example 1, Treas. Reg.... Read more →

New Rules for PFIC Annual Filing (Form 8621)

Last week the IRS released Treasury Decision 9650, which includes Treas. Reg. §1.1298-1T, temporary regulations regarding Passive Foreign Investment Companies (“PFICs”). A PFIC is defined as any foreign corporation if 75 percent or more of its gross income for the taxable year consists of passive income, or 50 percent or more of its assets consists of assets that produce, or are held for the production of, passive income. The quintessential PFIC is a foreign mutual... Read more →

International PLRs for the 50th week of 2013

Last Friday the IRS published the following Private Letter Rulings relating to international taxation. PLR 201350002, PLR 201350003 - Late entity classification elections for foreign entities to be treated as disregarded entities. Form 8832. Treas. Reg. §301.7701-3(c). PLR 201350006 - Application of Code §382 limitation rules to a foreign parent's U.S. subidiaries after spin-off transactions. PLR 201350008, PLR 201350009, PLR 201350010, PLR 201350026, PLR 201350027, PLR 201350028, PLR 201350029, PLR 201350030, PLR 201350031 - "No... Read more →

International PLRs for the 49th week of 2013

Today the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation. PLR 201349003 - Late IC DISC election. Form 4876-A, Code §992(b)(1)(A). PLR 201349010, PLR 201349011, PLR 201349012 - Late/retroactive passive foreign investment company ("PFIC") qualified electing fund ("QEF") elections. Form 8621. Treas. Reg. §1.1295-3(f). CCA 201349015 - Addresses the determination of creditable foreign taxes of U.S. corporations (or controlled foreign corporations) with foreign disregarded entities or branches. U.S.... Read more →

International PLRs for the 45th week of 2013

Today the IRS published the following Private Letter Rulings relating to international taxation. PLR 201345002, PLR201345007, PLR201345008, PLR201345009, PLR201345010, PLR201345011, PLR201345012, PLR201345013, PLR201345014, PLR201345015, PLR201345016, PLR 201345022 - Late entity classification elections for foreign entities to be treated as partnerships. Form 8832. Treas. Reg. §301.7701-3(c). PLR 201345031 - Denial of Code §501(c)(3) exemption for domestic organization acting as a "foreign feeder" charity. Read more →

International PLRs for the 44th week of 2013

This week the IRS published the following Private Letter Rulings relating to international taxation. PLR 201344007 - Early re-election of Code §911 exclusion. Form 2555. Treas. Reg. §1.911-7(b). (“Taxpayer lived in Taxing Jurisdiction 1, Country A. Upon the advice of Taxpayer’s accountant at the time, Taxpayer revoked her election under section 911 to exclude her foreign earned income and housing cost amount for Year 1. In Year 2, Taxpayer moved from Taxing Jurisdiction 1 to... Read more →

International PLRs for the 40th week of 2013

Last week the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation. PLR 201340007 - Late Canadian registered pension plan ("RPP"), registered retirement income fund ("RRIF"), and life income fund ("LIF") deferral elections. Form 8891. Rev. Proc. 2002-23. PLR 201340008 - Late/retroactive passive foreign investment company ("PFIC") qualified electing fund ("QEF") election. Form 8621. Treas. Reg. §1.1295-3(f). PLR 201040010 - Production activities included growing activities for purposes of determining... Read more →

International PLRs of the 34th week of 2013

For the 34th week of 2013, the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation. PLR 201334007, PLR201334034 - Late/retroactive passive foreign investment company ("PFIC") qualified electing fund ("QEF") election. Form 8621. Treas. Reg. §1.1295-3(f). PLR 201334009 - Code §355 spin-offs involving U.S. and foreign corporations that are directly or indirectly owned by a foreign parent company. Code §368(a)(1)(D). PLR 201334010 - Late Canadian registered retirement savings plan... Read more →

International PLRs of the 33rd week of 2013

For the 33rd week of 2013, the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation. PLR 201333004 - Late/retroactive passive foreign investment company ("PFIC") qualified electing fund ("QEF") election. Form 8621. Treas. Reg. §1.1295-3(f). PLR 201333007 - Code §355 spin-off and reorganizations of controlled foreign corporations. CCA 201333013 - Admissibility of foreign-based records when offered into evidence by a third party. Code §982. Read more →

International PLRs of the 30th week of 2013

For the 30th week of 2013, the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation. PLR 201330002 - Code §355 spin-off and reorganizations of foreign and domestic corporations owned by a U.S. parent corporation. Code §368(a)(1)(D). PLR 201330006 - Controlled foreign corporation's ("CFC's") distributive share of income from a foreign partnership is not includable in foreign base company income. Code §954. PLR 201330009 - Late entity classification election... Read more →

International PLRs of the 22nd week of 2013

For the 22nd week of 2013, the IRS published the following Private Letter Rulings relating to international taxation. PLR 201322007: Request to revoke a Code §83(b) election was granted because the request to revoke was within 30 days of receiving the property. Rev. Proc. 2006-31. PLR 201322009 - Application of certain look-through rules for purposes of determining whether a foreign corporation is a passive foreign investment company ("PFIC") within the meaning of section 1297. PLR... Read more →

International PLRs of the 21st week of 2013

For the 21st week of 2013, the IRS published the following Private Letter Rulings relating to international taxation. PLR 201321001, PLR 201321004, PLR 201321013, PLR 201321014, PLR 201321015 - Late entity classification election for a foreign entity to be treated as a disregarded entity. Form 8832. Treas. Reg. §301.7701-3(c). PLR 201321007 - Applicability of Code §§361 and 897 to a foreign corporation holding United States Real Property Interests ("USRPIs") when such corporation reincoroporates in the... Read more →

International PLRs of the 19th week of 2013

For the 19th week of 2013, the IRS published the following Private Letter Rulings relating to international taxation. PLR 201319006 - Late/retroactive passive foreign investment company ("PFIC") qualified electing fund ("QEF") election. Form 8621. Treas. Reg. §1.1295-3(f). PLR 201319007 - Late/retroactive passive foreign investment company ("PFIC") qualified electing fund ("QEF") election. Form 8621. Treas. Reg. §1.1295-3(f). Read more →

International PLRs of the 14th week of 2013

For the 14th week of 2013, the IRS published the following Private Letter Rulings relating to international taxation. PLR 201314001 - Code §355 spin-offs involving U.S. and foreign corporations that are directly or indirectly owned by a foreign parent company. Code §368(a)(1)(D). PLR 201314002 - A real estate investment trust’s (REIT’s) deemed inclusions as Subpart F Income under Code §951 and passive foreign investment company (“PFIC”) inclusions under Code §1293 are considered qualifying income under... Read more →

International PLRs & CCA of the 11th week of 2013

Last week the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation. PLR 201311001 - Consent was granted to change methods for measuring and timing and identifying employee stock options, restricted stock units, and performance-based restricted stock units pursuant to Treas. Reg. §1.482-7(d)(3)(iii)(C) for purposes of determining the amount the taxpayer must include in its cost sharing arrangement as intangible development costs. PLR 201311004 - The generation-skipping transfer tax... Read more →

International PLRs for the 2nd week of 2013

Last week the IRS published the following Private Letter Rulings relating to international taxation. PLR 201302010 - Late/retroactive passive foreign investment company ("PFIC") qualified electing fund ("QEF") election. Form 8621. Treas. Reg. §1.1295-3(f). PLR 2012011 - Late/retroactive passive foreign investment company ("PFIC") qualified electing fund ("QEF") election. Form 8621. Treas. Reg. §1.1295-3(f). PLR 2012012 - Late entity classification election for a foreign entity to be treated as a partnership. Form 8832. Treas. Reg. §301.7701-3(c). PLR... Read more →

International PLRs & CCA’s of the 51st week of 2012

Last week the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation. PLR 201251003: Shares of a domestic corporation were transferred to foreign corporation in order to deconsolidate the domestic corporation. Code §1502. PLR 201251005: A real estate investment trust’s (REIT’s) deemed inclusions as Subpart F Income under Code §951 and passive foreign investment company (“PFIC”) inclusions under Code §1293 are considered qualifying income under Code §856(c)(2). In addition,... Read more →

International PLRs of the 49th week of 2012

Last week the IRS published the following Private Letter Rulings relating to international taxation. PLR 201249008 Late entity classification election for a foreign entity to be treated as a partnership. Form 8832. Treas. Reg. §301.7701-3(c). PLR 201249014 Late/retroactive passive foreign investment company ("PFIC") qualified electing fund ("QEF") election. Form 8621. Treas. Reg. §1.1295-3(f). Read more →

International PLRs of the 48th week of 2012

This week the IRS published the following Private Letter Rulings relating to international taxation. PLR 201248002 - Granted request to revoke a Code §1504(d) election to treat a contiguous country corporation as a domestic corporation. The revocation was treated as an outbound F reorganization, with a termination of the year under Treas. Reg. §1.367(a)-1T(e) and deemed exchanges under Treas. Reg. §1.367(a)-1T(f). Although the ruling provided that the transaction would be "tax free" under Code §368(a)(1)(F),... Read more →

International PLRs of the 47th week of 2012

This week the IRS published the following Private Letter Rulings and Chief Counsel Advice relating to international taxation. PLR 201247002: Late entity classification election for foreign entity to be treated as a disregarded entity. Form 8832. Treas. Reg. §301.7701-3(c). PLR 201247003: Late entity classification election for foreign entity to be treated as a disregarded entity. Form 8832. Treas. Reg. §301.7701-3(c). CCA 201247013: A U.S. citizen cannot be treated as a nonresident alien under a “tie-breaker”... Read more →