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When computing the tax and interest you would only compute that for the shares/lot sold at a gain. Not for the shares sold at a loss.
So you will only have one part IV for the 8621
does that mean I cannot use the loss on the second lot to offset a PFIC gain even if both lots were the same mutual fund? - yes this is correct. Capital losses derived from the disposition of PFIC shares cannot be recognized per Treasury Regulation 1.1291-6(b)(3).
Basically the shares sold at a gain are what is known as a 1291 fund. The shares sold at a loss are gone. If you had not purchased the shares on different days/lots then you would not have this issue.
If the shares were publicly traded then you could have made the "mark to market election" thus eliminating the punitive interest charge. (just a note for future purchases of PFIC stock)(Generally you will want this stock to be publicly traded. If it is not publicly traded then you could inquire if you can get a "PFIC Statement" which will enable you to make a "QEF" Qualified Electing Fund election, which will also get you out of 1291 land.)
Sigh, that was my reading as well and was hoping someone would tell me otherwise :-) In any case, the amounts are small enough not to really matter except for the pain in computing the interest
I hope this helps. Please let me know if you have any further questions.
Ahh yes, if the amounts are small it is quite an exercise working through the interest charge....
I did make a Mark-to-Market for some other investments but was somehow under the impression that pure stock ETFs did not fall in the PFIC category
Yes these would be PFICs as well if they are foreign.
And going back to refile amendments (don't think that's even possible for mark-to-market) is not worth the trouble
Thanks for your answer
That's right, you can't make MTM election on an amended return. It must be made on a timely filed return.
Does life insurance also fall under PFIC ?
Or should I make that a separate question
(feel free to tell me so!)
hang on one minute
sorry about that.
This is a seperate question but I don't mind at all.
Generally life insurance would not be a PFIC unless you were buying shares of the company.
If it was like a co-operative where you own shares then it would be a PFIC.
If only owning a beneficial interest it might be a foreign trust or partnership (perhaps)
So surrendering / cashing a policy would be ordinary income?
By the way, to be fair, I will adjust the payment to make it a separate question
I hope this helps, please let me know if you have any further questions.
Did you have a response for my question about cashing in a life insurance policy?
as ord income?
Yes this would be ordinary income to the extent the receipt exceeded your initial investment.
OK, thanks, XXXXX XXXXX now...
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