22-Jun-2020 6:32pm
22-Jun-2020 6:40pm
22-Jun-2020 7:05pm
HenryDavid wrote:The gain is probably taxable in full I believe, but with an MTM election made for the year the person becomes a US resident the owner may get LTCG for the holding period prior to change in residency (https://www.form8621.com/pfic-taxation/ ... onal-rule/). There are certain exceptions with treaty countries ... and there is also a small holdings exception of some sort ($25k or less?). I don’t think the excess distribution rules apply to the full holding period, just to the period of residence, if you don’t make the MTM election. I’d pretty much always recommend the MTM election with foreign mutual funds.
Make sure you’re calculating basis correctly - FX fluctuations create some pretty big swings with gains that wouldn’t arise in the local currency.
23-Jun-2020 6:25am
HenryDavid wrote:The gain is probably taxable in full I believe, but with an MTM election made for the year the person becomes a US resident the owner may get LTCG for the holding period prior to change in residency (https://www.form8621.com/pfic-taxation/ ... onal-rule/). There are certain exceptions with treaty countries ... and there is also a small holdings exception of some sort ($25k or less?). I don’t think the excess distribution rules apply to the full holding period, just to the period of residence, if you don’t make the MTM election. I’d pretty much always recommend the MTM election with foreign mutual funds.
Make sure you’re calculating basis correctly - FX fluctuations create some pretty big swings with gains that wouldn’t arise in the local currency.
23-Jun-2020 10:57am
23-Jun-2020 3:14pm
HenryDavid wrote:I don’t give investment advice, but when I tell the client that each 8621 is an additional fee to prepare, and they have zero tax advantage (compared to some other investments), they usually make their own decision pretty quickly!
28-Jun-2020 10:16pm
30-Jun-2020 8:05am
puravidatpt wrote:Please allow me to use this thread to ask a follow up question.
Instead of PFICs, can we mark to market for the house, either primary residence or rental house?
To be specific, suppose someone, a single foreigner living in country X without special tax treaty with the US, bought a house 20 years ago for 100K in his home country, in 2018 he became US permanent resident and move to the US when the value of the house was 600K, and in 2019 he sold the house for 900K, can he "mark to market" in 2018 and report 300K gain (900-600 before 121 exclusion) in 2019? Or you needs to report 800K gain (900-100 before 121 exclusion) regardless?
Thanks a lot.
30-Jun-2020 9:17am
30-Jun-2020 10:52am
HenryDavid wrote:what country was (is) the taxpayer a former resident of? was the property owned within the same country?
30-Jun-2020 1:08pm
30-Jun-2020 7:30pm
HenryDavid wrote:I don't think a "step-up" is going to be permitted here. Did the individual have to pay tax to China on moving to the US? Or will the individual have to pay tax to China when the property is sold, in which case, perhaps an FTC might be claimed in the US?
If the property was sold tomorrow, would the personal residence exclusion possibly apply (I don't know the answer to this offhand)?