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TaxRobin
TaxRobin, Tax Preparer
Category: Capital Gains and Losses
Satisfied Customers: 13323
Experience:  15+ years in Tax preparartion as well as Instructor for tax law, theory, and application
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I bought and sold pfic stocks in the same year 2015, now I

Customer Question

I bought and sold pfic stocks in the same year 2015, now I don't have any. most of stocks have losses, but two of them have very small gains. about two of the pfic stocks have a little distributions (1 share and 0.003 shares, respectively); all together the gains are less than $200. do I need to file form 8621, or just report on schedule D and 1099d. if to file 8621, I cannot make an election, no excess distribution. on form 8621, part I - what's the class of those shares - common stock? what is the type of PFIC - section 1291 (but I don't have excess distribution)? part II elections - I don't see any one is suitable for me. part III and IV are not for me either. if I just pick part IV MTM, can I use the purchasing cost as adjusted basis? how to include the distributions? thank you!
Submitted: 1 year ago.
Category: Capital Gains and Losses
Expert:  TaxRobin replied 1 year ago.

Hello

Section 1291(a)(2) says that if there is a disposition of PFIC stock, then you treat the gain as an “excess distribution” and apply the rules of Section 1291(a)(1). Yes you do have excess distribution.

When you sell your PFIC stock, your gain is an “excess distribution” and taxed as such.

You allocate the gain across the time you hold the PFIC, day-by-day. [Section 1291(a)(1)(A)].

You treat the amount of that excess distribution as ordinary income if it is allocated to the current year. [Section 1291(a)(1)(B)(i)].

All of the gain is treated as an excess distribution, and is ordinary income to you. You cannot just use the Schedule D.

Gain from sale of a Section 1291 fund is reported on Line 10f of Form 8621. The instructions to Line 10f note that the gain is taxed as ordinary income.

You attach a statement showing the holding period and the allocation of the gain across the days you owned the PFIC stock.

Line 11b should be the same as Line 10f. This is because the amount of the gain from sale of your PFIC stock that is allocable to the current tax year.

Line 11b goes on the Form 1040 on page 1, on the “other income” line.

If you do not feel comfortable completing your reporting you may wish to use a tax professional for this year so the pfic is correct.

If my answer addressed your question please rate below or above (let me know if you have difficulty as I believe the system changed).

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