Category Archives: PFIC

Are “non-U.S. mutual funds” foreign corporations AKA #PFIC? Does your tax preparer know for sure?

I have written many posts that include a discussion of PFICs. This post has been motivated by a post by Karen Alpert at “Fix The Tax Treaty” (well it can’t really be fixed). The post focuses on the use of “non-U.S. mutual funds” in retirement planning. The post is written from the perspective that “non-U.S. mutual funds” ARE PFICs.

If you don’t know what a PFIC is be happy, be happy! A bit of knowledge (especially if you know things that aren’t true) can be a dangerous thing. Although most “tax professionals” treat non-U.S. mutual funds as PFICs, there is little explanation or analysis of WHY or HOW a “non-U.S. mutual fund” is a PFIC. In other words, most “tax professionals” know that “non-U.S. mutual funds” are PFICs. But, they don’t do a good job of explaining why. This post is based on a series of comments on Karen’s post that are consolidated as tweets in this Storify post.

Continue reading

How the logic of the quantifiers: “All”, “Some”, and “Not All” apply to Canadian mutual funds

What is a PFIC?

The acronym “PFIC” stands for “Passive Foreign Investment Corporation”. For your reading pleasure, I refer you to:

S. 1297 of the Internal Revenue Code which defines what a PFIC is; and

S. 1291 of the Internal Revenue Code which describes the “default taxation” of a PFIC.

Assuming that all Canadian mutual funds are PFICs, the results are horrific. I have written about this problem in two separate submissions to the U.S  Senate Finance Committee.

Continue reading