(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?
Attached is the PFIC I got from IMGA - you can email them yourselves of course (and should!) but this is the info you’re looking for. I believe Bison also has this now and probably you can get it through them too, possibly they’ll put out their own form with your specific info?
Well, it is what you got, and you can file your taxes with it. You just have to do all the legwork of formatting into what you need it to be.
You have to figure out FBAR maximum account value yourself. Which you can, but it’s tedious, since you have to figure out the value of the account at every point in time, then apply exchange rate, and then see what the max value was.
I read the FBAR instructions to mean that the maximum value (during the year) of any cash account (in the local currency) could be converted to dollars using the average exchange rate for the year or the published rate at the end of the year. Those exchange rates are available online. I believe the FBAR has a checkbox to designate which exchange rate was used.
“The maximum value of an account is a reasonable approximation of the greatest value of currency or nonmonetary assets in the account during the calendar year”
For me, with reporting the FBAR, I think it’s most important to have accurate information on the accounts, rather than an exact value. To come up with a value, I try to error on the side of being too high vs too low. There are lots of variables in coming up with a value - valuation and currency conversion being the biggest for me.
As long as there is good faith compliance, I try not to worry about it.
Doing the calculations from the IMGA PFIC example + that youtube video (very handy, thank you!), I’m coming up with over 7k of additional income despite no distributions! This seems awfully punitive to those that invest in foreign funds.
When we sell, do we presumably get a favorable tax treatment where we only pay for the gains from the year we sold? Or are we just getting screwed
EDIT: according to what I can find, yes if we’ve paid tax on the PFIC already, you can sell without paying any more tax. Phew!
This is SOP - investors in PE in the US are taxed in the same way, namely, on a year to year passthru basis whether or not there’s a distribution.
I’ve discussed this at length elsewhere. Basically, folks investing in PE offshore are being held by the IRS to what are plus or minus the same rules for PE onshore. This makes perfect sense, really. It’s just that most people will never have run into this before, and of course no one in PT selling the funds have any knowledge of the matter with which to tell anyone that that’s what’s going to happen (nor indeed is it really their problem). I imagine some investors are going to find themselves seriously displeased to have to pay bunches of taxes out of their pocket with zero ability to sell any of the shares to pay the taxes with… hope they kept a good cash cushion…
I eventually did hear back from IMGA, for whatever reason their published client email address flagged my request as spam. They were happy to provide the same doc you got, but suggested that Bison has all the client info, and that Bison should be the ones sending this out. Haven’t followed up there, will report back my experience.
8938 is redundant , I agree. I just watched an hour long video last night by a US CPA/attorney who is connected to one of our RE funds we invested in. He said there are fines, though, if you don’t fill out all of them. fines run around 10,000 as stated by the IRS code! I’m getting them both filled out!
Also the 8621 has to be filed each year for every fund/account that you owned even for one day in that year was my understanding. We have 2 bank accounts and 2 different funds, so I think we’ll have 4 forms.
and then there is the FBAR form too…
Im not an expert, but those are the notes I took from the seminar. I’d say check it out with an accountant to verify if Im understanding it correctly. I plan to!