What is the correct tax
treatment for the sale of a foreign
, would be treated as PFIC) fund, which was purchased BEFORE becoming a US resident and sold during the year that one becomes a Green Cardholder and US Resident for tax purposes? Specifically:
-Does a Mark-to-market (MTM) election and Form
8621 need to be made and filed for PFIC's that were sold during the year and before 12/31/12?
-If yes, what is the MTM valuation date? The date of disposition versus the 1/1/12 valuation?
-If MTM required and included on Form 8621 as ordinary income
, does the remaining gain/loss get capital gain
treatment and included on Sch D?
-The instructions refer to 1.1296(i--which refer back to rules
of section 1291 which seems to specify the a disposition is to be treated as excess distributions
under the Default Method. This stuff is ridiculously confusing.
Please use an example:
-Purchased XYZ Fund 100 GBP 1/15/10 (exchange = 1.6262)
-Move to USA and obtain Green Card 12/16/12, would also meet physical presence test
-Sell XYZ fund 10/31/12 at 200 GBP (exchange = 1.6133)
-exchange at 1/1/12 =1.5518
-exchange at 12/31/12=1.6244
And what if opposite, same fact as above but:
-purchase XYZ fund for 200 GBP
-sell XYZ fund for 100 GBP
Please respond only if you have substantial experience in this highly technical tax area--I prefer CPA or international tax attorney.