Pfic stock options

For purposes of income tax stock the United StatesU. However, amendments [3] limited the application in the case of U. Shareholders of controlled foreign corporations. PFIC status does not, itself, have any impact on the foreign corporation or foreign shareholders. The test is applied based on the foreign corporation's adjusted basis, for U.

This regime is as follows: Next, the amounts allocated to prior years after are excluded from current year taxable income. Then tax is computed on amounts allocated to each prior year at the maximum rate of tax applicable to the type of taxpayer for such year prior year tax. Then interest is computed on such prior year tax as if it were an underpayment of tax interest charge.

Finally, current year tax is increased by the aggregate of prior year tax amounts and interest charge amounts. The interest charges are stock using compound interest on an April 15 to April 15 basis. The PFIC annual information stock is a rough equivalent of Form This election is effective for the year in which the election is made and all subsequent years.

The tax and interest regime is avoided to the extent this election applies. This election helps U. For example, shareholders of corporations are usually subject to U. QEF status applies only to the shares of a particular shareholder acquired during a tax year for which the QEF election was in force, assuming that the QEF election remains in place throughout the holding period.

Such status does stock apply to other shareholders or to persons acquiring the particular shares. QEF status fully avoids the tax and interest regime only if it is effective from the beginning of the share's holding period. The shareholder may make one of two gain recognition elections deemed sale and mark to market or, if the shareholder is a corporation, a deemed dividend election.

In each case, the gain or deemed dividend recognized under the election is subject to the tax and options regime. A shareholder of a PFIC may also elect each year to recognize gain or loss on the shares as if he, she or it had sold the PFIC shares at fair market value, although gains are taxed as ordinary income. Losses generate ordinary income deductions to the extent they reverse prior gains, on a share-by-share basis, after which they are claimed on Options schedule D.

Such election is available only for shares the market value of which is readily determinable e. Shares subject to this election are not subject to the tax and interest regime. QEF or Sect election. Such shareholders are, instead, subject to the CFC rules. Stock form is used to report actual distributions and gain, options well as income and gains under a QEF election. Such form is also used to make the QEF and purging elections described above. Failure to file options form in a year in which no income is properly reported does not carry specific penalties, but may render the return incomplete and potentially subject to tolling of the statute of limitations.

From Wikipedia, the free encyclopedia. This article is part of a series on Taxation in the United States of America Federal taxation. Alternative minimum tax Capital gains tax Corporate tax Estate tax Excise tax Gift tax Income tax Payroll tax Internal Revenue Service IRS Internal Revenue Code IRC IRS tax forms Revenue by state History Constitutional authority Taxpayer standing Court Protest Evasion.

State and local taxation. State income tax Property tax Sales tax Use tax Land value tax State pfic levels. Automated payment transaction tax 9—9—9 Competitive Tax Plan Efficient Taxation of Income Pfic Flat tax Hall—Rabushka flat tax Pfic Commission Taxpayer Choice Act USA Tax Value added tax Border-adjustment tax.

However, pfic exceptions apply, such as for shareholders of S Corporations, 26 USCet seq. Retrieved from " https: International taxation Taxation in the United States. Navigation menu Personal tools Not logged in Talk Pfic Create account Log in. Views Read Edit View history. Navigation Main page Contents Featured content Current events Random article Donate to Wikipedia Wikipedia store.

Interaction Help About Wikipedia Community portal Recent changes Contact page. Tools What links here Related changes Upload stock Special pages Permanent link Page information Wikidata item Cite this page. This page was last edited on 27 Juneat Text is available under the Creative Commons Attribution-ShareAlike License ; additional terms may apply.

By using this site, you agree to the Terms of Use and Privacy Policy. Privacy policy About Wikipedia Disclaimers Contact Wikipedia Developers Cookie statement Mobile view. This article is part of a series options. Federal taxation Alternative minimum tax Capital gains tax Corporate tax Stock tax Excise tax Gift tax Income tax Payroll tax Internal Revenue Service IRS Internal Revenue Code IRC IRS tax forms Revenue by options History Constitutional authority Taxpayer standing Court Protest Evasion.

State pfic local taxation State income tax Property tax Sales tax Use tax Land value tax State tax levels. Federal tax reform Automated payment pfic tax 9—9—9 Competitive Tax Plan Efficient Taxation options Income FairTax Flat tax Hall—Rabushka flat tax Kemp Commission Taxpayer Choice Act USA Tax Value added tax Border-adjustment tax.