Advisors and their clients need to be aware of the PFIC rules as they apply to their clients that are investing abroad. If your client is considering investing in a foreign corporation that might otherwise seem like a rather benign investment, that client likely has disclosure requirements back in the U.S. and if classified as a passive foreign investment company (PFIC) may incur unexpected tax due to the complicated U.S reporting regime for PFICs.
This article will help the reader understand the technical definition of a PFIC followed by certain elections a taxpayer can make to minimize the negative U.S. tax consequences of owning shares in a PFIC.
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For more information on Passive Foreign Investment Companies, please contact Chris Benner by calling 770.396.2200.