US IMGA investors tax filing

Hi all, figured I’d start a thread about how the heck to file taxes for reference to others and to ourselves next year, when we have to do it again :slight_smile:

My understanding is that US investors in the IMGA fund (assuming a 350k EUR minimum investment) need to file the following forms:

FBAR (online)
8938
8621

I am using freetaxUSA to do my taxes, they support sending the 8938 but not 8621.

Filing the FBAR was trivial, no concern there. The US govt’s website kinda sucks but it’s not awful.

FreeTaxUSA fills out your 8938 like this if you forget to say you have another depository account. If you tell freetaxusa about both the account reported on the 8621 (eg your IMGA investment) AND your bison depository account, you get a longer form with info on bison and the max value of the depository account through the year.

For form 8621 itself, we need to fill in some information at the top about the fund, and then part 3 6a-c and 7a-c. I believe we need some sort of form from IMGA for this, which I’ve emailed them about, but haven’t gotten a response.

EDIT: Though looking at it, since IMGA Acoes portugal class R shares don’t pay dividends or anything, surely all of 6abc and 7abc are 0? I’m also confused by part 1 question 1, description of each class of shares held by the shareholder - I suspect “Class R investor shares” is wrong, but I don’t know what I would put

How’s everyone else handling their taxes? Any thoughts on the above? Am I missing anything?

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No, that seems quite clear and straightforward. The point is to report all foreign accounts. If the only accounts you have are those that would be reported with 8621, you are reporting them on 8621 and providing appropriate identifying details on 8621, to then include the same information on 8938 is redundant. As to whether to file a practically-empty 8938 versus the choice to not include it at all, I probably would include it but it’s IMO it’s irrelevant if you do or don’t.

I won’t comment on filing 8621 as I have chosen to hire the whole thing out.

Are you invested in IMGA Jeff? I can’t recall who’s invested in what offhand haha. If you are, I’m very curious to see how your CPA handled the 8621 if you don’t mind sharing (a redacted, of course) copy. I’ll likely have to file for an extension this year I suppose.

I edited the above, but you commented before I did - I am pretty sure I have to declare two accounts to freetaxusa and the feds - both the 8621 PFIC eg my IMGA investment, AND the Bison depository account. Reworked my submission a bit and 8938 seems a lot less useless :slight_smile:

I am not.

As I’ve recommended elsewhere, there are firms that will interpret your PFIC statement into an 8621 for like $150 as a specialty task. IMO this is a far better approach than DIY for something you don’t understand.

And yes you have to declare the bank account itself on 8938 and FBAR.

And yes, extensions will become the norm no doubt. Get used to it.

Oh I’ve missed that, could you link one if you have a particular recommendation? Or do I just Google something like pfic 8621 filing?

Hmm, I reported on my FBAR three accounts (USD account, EUR account, IMGA “account”) since that’s what shows in my Bison Bank account. I suspect over-reporting is probably fine, wouldn’t want to risk under-reporting for sure!

thanks for starting this thread. Also invested in IMGA

First note is that the “year end statement” received from Bison doesn’t qualify as a PFIC statement per the IRS regs per my CPA (and reading the regs, I would agree) as it is missing various information. Second, Bison is considered an intermediary under those Regs and so could only provide a PFIC statement if IMGA first provided a PFIC statement to Bison.

The way the CPA has listed my accounts on the form 8938 is 1) a “custodial account” in which the IMGA holdings funds are held and 2) a deposit account (the cash portion). Both are listed with Bison.

I had my draft 8621 but for some reason it’s no longer in my drafts folder but would imagine it mirrors the 8938 form.

I would be very very interested in seeing how your 8621 looks if you can find it.

My reading of the 8938 form is that if you declare something on your 8621 (the IMGA investment) that is not necessary to declare on your 8938.

Thank you for the info before that, I knew it but didn’t write it down, good to have here

This is what I get for half-responses on the fly to things, I give half-answers.

Bank accounts and depository/securities accounts are ALWAYS going to be FBAR-reportable as a bank is most clearly a “financial institution”. It is the very fact that it IS the ledger that is what makes it matter.

IMGA itself is not FBAR-reportable. You’re buying the shares of the fund through the bank. The bank holds the shares on its ledger in the depository account.

This is actually no different than how things operate in the US. You buy a share of a Vanguard mutual fund in your IB or TD account. The shares are registered at DTCC in street-name, e.g. they’re really owned by IB/fidelity on your behalf. Your broker is the one sending the 1099B to the IRS, not Vanguard.

Now, if you had interacted with IMGA directly, opened an account with IMGA directly, and wired the money to them directly, then I’d say IMGA was the reportable entity. But no one (to my knowledge) is doing this; it’s all going through bank depository accounts. Therefore the bank is the entity you report. I won’t address the question of whether it was possible to do this the other way or not since I don’t know.

This still holds true for the VC funds since it’s still the same basic principle. You have a relationship with the fund manager directly sure, but that’s the relationship that an investor would have with a company they bought shares in. The bank is still involved.

You have to file 8621 for tax purposes but not for reporting purposes.

So in the case -
you’d file Bison on the FBAR. Not IMGA.
8938 would have bison.
and 8621 would show the gains/losses for the IMGA shares but the info would not be duplicated on 8938.

All IME and IMO, YMMV, this is not professional advice, all CYAs to be included.

Do people have an opinion on which is the appropriate way to handle the interaction of the Bison custodial account (which I’m considering separate from the bank account) and the PFIC for form 8938? My initial lean is to go with A because I believe this is consistent with the regulation.

A) The PFIC is not a specified foreign asset because the custodial account is:
I believe this is the technically correct approach based on my reading of the regulations, which state that an account, not the investments within the account, are the specified foreign financial assets. However it seems counter to what the intent was with regard to excepting items on form 8621:
Form 8938: Report the custodial account at Bison with the PFIC fund value included. Include any taxable items on this form and reference form 8621 as where reported. Enter 0 for number of excepted assets reported on 8621.
Form 8621: Do not check the box, as the asset is appropriately reported on form 8938

B) PFIC is an excepted specified foreign Financial Asset:
I believe this is not technically correct but seems more in line with the spirit of the intended reporting of the PFIC.
Form 8938: Report the depository account with a value of $0 (since I have no other assets in the account. Perhaps directly indicate that this report excludes form 8621 assets). Do not include any taxable items on this form. Enter 1 for the number of excepted assets reported on 8621.
Form 8621: Check the box to indicate that this form is where the values are reported.

C) Option B, but include value of account on 8398 without any tax items
Duplicates reporting of value in both places. In this case I don’t think I’d include the tax items, because in that case then I essentially have reported everything and don’t need to indicate an excepted asset. Doesn’t seem like the right option to me.

If anyone thinks an alternate approach is appropriate please share as well. Thanks all

Just glancing at it, I don’t think there is a “right” answer because the value of the custodial account does need to be reported, and subtracting the value of the PFIC seems odd. I would actually go with (D) of reporting 8939 with the custodial as if the asset weren’t 8621, then put a “1” in part IV and then fill out 8621 anyway with the box checked. Sure it is duplicative, but the correct answer is unclear in any event.

The problem is that you can own a 8621 asset without actually having it be in a custodial account. That’s more or less how the forms appear to be written. The 8621 asset being held in a custodial account that is itself reportable, well.

All that said I would fall back on the “substantially correct” defense anyway. There are two basic tenets of taxation, from all I have read and from speaking with my attorney:

As long as

  • the amount of tax is correct, or substantially so
  • the basic information is all there and there has been no attempt to hide anything
    Then you’re fine. Everything else is syntax and matters far less than you think. At most it generates a CP2000 and you have to write an explanatory letter.

If you didn’t file 8621 at all, doom awaits, same as if you hadn’t filed 8938. That’s not disclosing. “I put it here not here because the instructions were unclear for this situation but from the point of view of the final tax number, it all comes out the same” is a perfectly viable defense.

I know not everyone agrees with me on this point and many view the IRS as a bunch of jackbooted thugs. I’ll just say that I’ve been on the other end and that isn’t my experience. But then, if you’re actually not coughing up, well, I imagine that’s a different matter entirely.

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This sounds more correct to me as well, but I am not a tax guy of course.

I plan to over-report rather than under-report. I’ve heard that yeah the IRS is very helpful if you’re operating in good faith. Speaking of which I need to call them today, I’ll report back on how their customer support is haha

Thanks Jeff and Garrett. The regulation says that an item that is in a custodial account is not required to be reported, but it doesn’t indicate that it can’t be reported, so I agree either my (A) or your (D) approach is probably correct. And agree either of these is defensible.

Has anyone found a PFIC form from IMGA or had an 8621 filled out somehow? That’s the last stumbling block for me.

I emailed IMGA but haven’t heard anything, I’ll try again and maybe see if I can stop by while I’m here in Lisboa

Is IMGA considered a marketable stock? (traded on a national security exchange among other things) If so, I think you can choose mark-to-market election. MTM election doesn’t require a PFIC statement from what I remembered. It is not as tax friendly as QEF, but still much better than excess-distribution regime.

Good news, imga emailed me a pdf today. I’ll post how I fill out my 8621 once I get to it ( I filed for a tax extension)

They said they’re sending it to bison as well to be distributed

After struggling through this a lot in the past week, here are my observations.

  1. I’ve seen people mention that we need to consult a tax professional. But just like all professionals, the biggest problem is finding a competent one. The tax professional I went with, didn’t make QEF election after providing the documents. Once I pointed out it to him, he made the change, but the total value field didn’t match up with my calculation. So I asked him how he came up with the number. Instead of explaining how he came up with the number, he just offered to use my number. I lost all confidence with him.

  2. Another nomad gate member recommended tax act software, but it had way weirder bugs just to calculate the state and federal taxes. I tried H&R Block and it asked me too many irrelevant questions and a form to fill up to match up with a tax accountant. Ditched it

Turbotax was the best for everything else, except PFIC. Turbotax also had an issue where it didn’t show my income in state taxes, but it did show up in the filing docs, so I will give it a pass.

I came to terms with the fact that my tax situation is really complicated and it is best to go with turbotax because , even if I magically managed to find a CPA, there is no way to know if he is competent. Now the only thing I needed to solve is the PFIC 8621 itself. And I think I found a video that helps in this case. I’m still planning to use some company to create my PFIC, but I’m going to validate the statement with the help of the video. In order to do this yourself, you need 2 statements.

  1. PFIC from IMGA
  2. Bison bank statement.

(I’m putting this on both threads, since the readership is overlapping but not identical.)

Thanks for that link, Ravi! One thing that I found interesting when I went to another video on that guy’s youtube channel for the 8938 (How to Complete IRS Form 8938 For Specified Foreign Financial Assets - YouTube) is that he reported a PFIC fund on both the 8938 (Part II and VI) and the 8621, even though the wording on the 8938 seems to suggest that if you report a fund on the 8621, you don’t also report it on the 8938.

Were you able to get the PFIC statement from IMGA? If so, how?

Also, (editorial comment), I found the Bison statement to be very limited in its data. Nothing close to a 1098, which is what I was expecting. I queried the Bison account manager, and he said what I received was the data needed for US tax purposes. What I received was a 31-Dec valuation, and a summary of the transactions (purchase) in 2021, as well as an enumeration of dividends/interest/income (all none). Is that to be expected?

I got my PFIC from IMGA directly - the manager emailed it to me. I’ll share it in a bit once I look it over but I don’t believe it’s unique to me