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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7715
Experience:  15years with H & R Block. Divisional leader, Instructor
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Robin D I have silver and gold etf pslv and phys at sprott

Resolved Question:

Robin D
I have silver and gold etf pslv and phys at sprott physical bullion trust which is a Passive Foreign Investment Corporation (PFIC). I am ok to pay income tax at regular income tax rate rather than capital gains rate. Do I have to fill form 8621
(1) If I hold these etf in brokerage account
(2) If I hold them in traditional ira or roth ira account

I hold gold at bullionvault.com, a uk company holding vaulted gold for amount exceeding USD 10k. Do I need to fill any form like 8621 for that one? As USA resident, do I need to file FBAR or FBAR is only for holding currency in foreign accounts exceeding 10k.
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,
If held in the brokerage account yes, they must be reported. The IRA no. If you have a gold-backed account that is overseas, you must report it on your FBAR regardless of where gold is actually located. It is safer to report then leave the info unreported.
The FBAR is required for accounts that are overseas so yes, report on the FBAR.
Again, I know this area is confusing.
A “financial account” includes any bank, securities, securities derivatives or other financial instruments accounts. The term includes any savings, demand, checking, deposit or any other account maintained with a financial institution or other person engaged in the business of a financial institution. Financial account also generally includes any accounts in which the assets are held in a commingled fund, and the account owner holds an equity interest in the fund (including mutual funds). Individual bonds, notes, or stock certificates held by the filer are not a financial account nor is an unsecured loan to a foreign trade or business that is not a financial institution.

Robin D :

The best thing to do, I would surmise, is if it is questionable, to include it on a FBAR (although it may be argued not to be included). Yes, I know that can be exhaustive but as the potenial for penalty is large I would rather err on the side of caution.

Customer:

Do I have to fill form 8621 in brokerage account every year or only in the year when I sell pslv, silver etf in PFIC. Do I need to fill form 8621 for bullionvault, uk company which holds vaulted gold?

Robin D :

Notice 2011-55 informed PFIC investors that the annual report required under Sec. 1298(f) is expected to be in the form of a revised Form 8621 attached to the PFIC investor’s income tax return or information return.

Robin D :

So every year is my understanding

Robin D :

Yes on the gold

Customer:

I do not know whether bullionvault holding physical gold in their vaults on client's behalf will be considered PFIC passive foreign investment company.

Robin D :

Let me check more on the specific gold holding.

Robin D :

If the main purpose is to hold the gold for the US person then I would say yes. It would be like a bullion trust.

Customer:

In case of bullionvault (bullionvault.com), I will be considered legal owner of gold maintained in their vaults. They are only custodians for the gold. I am not shareholder or ... Do I have to fill form 8621?

Robin D :

If you are the legal owner and they are only holding then no on PFIC. The FBAR though yes.

Robin D :

I can see where you are not investing in a holder but own the gold and just need a place to store it.

Robin D :

I know that last statement simplifies it but

Customer:

If I purchase gold from my US earned income this year as USA resident for 10k. I leave USA in year 2018 and become nonresident of USA. If I sell gold in year 2021 when I am a nonresident, will I pay collectible gains tax (same as income tax rate).

Robin D :

The gold is held in the IRA so yes, you will be taxed on the income but at regular rates. This is because it is held in the IRA.

Robin D :

You will only pay tax on teh amount that is distributed form the IRA that you received a tax deduction on in the year you mad ethe contributions to teh iRA.

Robin D :

In other words

Customer:

This is regarding physical gold at bullionvault non-ira account

Robin D :

Then no, if you are a non resident you would not be taxed on anything except US sourced income.

Robin D :

Gold held in a foreign account and sold would not be US sourced

Robin D :

for a nonrsident

Customer:

What about gold etf held in a usa brokerage account at fidelity as a nonresident?

Customer:

fidelity is a usa company.

Robin D :

Good question. Let me double check on the gold for NRA

Robin D :

Yes you would be taxed as the gold would be an asset that would be considered in the US. The location of the asset determines source for taxation.

Customer:

I will be taxed as nra on gold etf sale in usa account or usa bank interest income and any conversion of ira to roth ira when I am nonresident of usa. I will not be paying income tax on non-usa holding of gold or bank interest income.

Robin D :

US interest would not be taxable (as long as it was personal and not business) when you are a NRA. The conversion of IRA to Roth would be a taxable event on any amount that was in the IRA and not taxed when contributed.

Customer:

I currently as USA resident have forex oanda account which gives me carry or rollover interest rate for short position of USD-INR pair of 5% per year. I generally take short position on usd-inr. As Indian rupee INR decreases w.r.t. USD with time, I also lose some money when I buy back USD-INR pair after few months. While filing tax, should I put interest income of 5% and capital loss in trading losses of usd-inr pair because of inr value decrease. Example: sold usd-inr at INR 57 per usd, kept for 1 year, bought usd-inr at INR 59.5 per usd. interest income: 5%. Capital loss: 4%

Robin D :

You have to claim the interest earned when you convert to US dollar. What you are describing on the buy back sounds more like a wash sale and the loss is not allowed.

Robin D :

Under Internal Revenue Service rules, you cannot deduct losses from sales or trades of stock or securities in a wash sale. A wash sale occurs when you sell or trade stock or securities at a loss and within 30 days before or after the sale you:



Buy substantially identical stock or securities,


Acquire substantially identical stock or securities in a fully taxable trade, or


Acquire a contract or option to buy substantially identical stock or securities.


Robin D :

We are sort of getting into additional questions that are not related to your original post.

Robin D :

Just answer reminds experts that we are to encourage a new post when the question strays into new territory.

Customer:

May be I should have started this question in another post but I do not know what will be best now other than completing this question here? I sell usd-inr pair in april 2013 in forex trading account. If I buy back usd-inr pair after 1 year. Can I deduct loss as capital loss.

Robin D :

Yes, as long as it is not within 30 days.

Customer:

thanks.

Robin D :

You are most welcome

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7715
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 3 other Tax Specialists are ready to help you

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Robin D.
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15years with H & R Block. Divisional leader, Instructor