Passive Foreign Investment Company

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Passive Foreign Investment Company

A company based in a foreign country where either at least 75% of its income comes from passive sources, such as rent or dividend, or at least 50% of its assets carry dividends or interest. PFICs are subject to strict tax guidelines in the United States that intend to discourage investment by Americans. See also: Income test, Asset test.
References in periodicals archive ?
1411-10 covers controlled foreign corporations and passive foreign investment companies.
The IRS suspended FATCA (Foreign Account Tax Compliance Act) information reporting requirements for certain individuals with foreign assets and shareholders of passive foreign investment companies (PFICs) under IRC [section][section] 6038D and 1298(f) (Notice 2011-55).
He advised both National Office attorneys, IRS field attorneys, and attorneys in the Department of Justice on a broad range of international issues including foreign tax credits, foreign currency issues, subpart F and passive foreign investment companies, dual resident companies, hybrid financial instruments, partnership allocation issues and many other matters.
do not anticipate making year-end ordinary income distributions in 2008 due to losses in foreign securities classified as passive foreign investment companies that were held by each of these funds.
Under Internal Revenue Code section 904(d)(1)(E), dividends paid by 10/50 corporations that are not passive foreign investment companies (PFICs) are treated in the aggregate as a separate category of income and are placed in this basket.
Those areas identified in 1996 and subsequently addressed by Congress include: overlap of the Controlled Foreign Corporation (CFC) and Passive Foreign Investment Companies (PFIC); the non-controlled section 902 foreign tax credit basket; the excess passive asset rule in Section 956A and the subpart F treatment of active financial services income.
He regularly provides advice regarding structures for conducting global business and investment activities, establishing foreign holding companies, representative offices, branches and subsidiaries, forming offshore funds, international transfers of assets including intellectual property, and specifically on issues such as Subpart F and passive foreign investment companies, tax treaties, FIRPTA, foreign tax credits, buy-ins and cost-sharing arrangements and transfer pricing.
A different rule applies with regard to investments in controlled foreign corporations (CFCs) and passive foreign investment companies (PFICs) that have made a qualified electing fund (QEF) election, which may require current inclusion in federal taxable income regardless of whether the income is in fact distributed.
Yet another provision applies to passive foreign investment companies (PFICs).
On February 3, 1993, Tax Executives Institute submitted the following comments to the Internal Revenue Service on proposed regulations under sections 1291-1297 of the Internal Revenue Code, relating to passive foreign investment companies.
Certain of RAP's investments are in real estate companies characterized as passive foreign investment companies ("PFICs") for U.
1411-4(g) provides special rules for the treatment of distributions from controlled foreign corporations and passive foreign investment companies.