Why is this needed?

Passive Foreign Investment Companies (PFICs) must be reported at the fund level on Form 8621.

What does this mean?

  • Each fund being reported will have its own copy of Form 8621.
  • Gains and losses are calculated per fund. This means the loss of one fund will not affect the gain of another fund.

How does Form 8621 work?

  • Form 8621 requires us to track the USD cost basis (using the spot rate) of each purchase to determine any applicable capital gains and losses.
  • Additionally, all income (distributed or reinvested into the fund) is also seen as taxable income.

Why do I only need to do this sometimes?

  • If you invest in US-regulated mutual funds, the mutual fund’s financial institution will handle this reporting and send you a US Tax Form 1099.
  • For foreign-pooled funds, you are responsible for reporting this.
    (But you have us to help!)

How to start

We will need a transaction history for all your foreign mutual funds, dating back to their initial investments.

  1. Download the “PFIC Transaction Template” spreadsheet we’ve provided above
  2. Add your complete transaction history to the template, including:
    • All purchases
    • All dividends, reinvestments, and other distributions of any kind
    • All sales

Reading the Transaction Template

The template should be filled out with rows of your transaction information. The columns are categorized with the following:

  • Investment:  
    This is the fund name.
  • Date
    This is for the INITIAL date of a transaction.
    (Even if the transaction is processed or booked later.)
  • Transaction
    This is for listing the type of transaction. We suggest you limit your transaction history reporting to the following transaction types:
Transaction TypeDefinition
PurchaseBuying initial or additional units
DistributionEarnings that are distributed (paid out). These earnings are not reinvested (automatically used to purchase additional units of the fund).
ReinvestmentWhen the fund’s earnings are automatically used to purchase additional fund units. These earnings are not distributed (paid out).
SaleSelling units
  • Units:
    This is the number of shares added or removed.
    This is required when there is a purchase, reinvestment, or sale.
    This is not required for distributions, as there should be no change in number of units.
  • Original Amount:
    This is the monetary value of the transaction in the original (local) currency.
Transaction TypeHow to calculate
PurchaseTotal purchase price = (purchase price per unit) x (number of units purchased)
DistributionThe total income earned (dividend, interest, etc.) on this date.
ReinvestmentTotal income earned (dividend, interest, etc.) on this date used to purchase additional units.
SaleTotal sale price = (sale price per unit) x (number of units sold)
  • Local Currency:
    This is the original (functional) currency of the fund.
  • Exchange Rate/USD:
    No need to fill this out; we fill this out for you!
  • Reported this transaction on a US Tax Return:
    This is an optional column.
    This informs us if you reported this PFIC transaction in previous years.
    Typically, we could figure this out based on your prior year’s tax returns.

Without a reliable, completed transaction template,
we cannot accurately create Form 8621 for you.

No one can. This information is what is needed to begin PFIC reporting.
We can only set up your PFIC reporting Form 8621 at our affordable rate if you provide a completed transaction template. Should you refuse or fail to do this, we must refer you to a PFIC partner. PFIC partners charge $165+/hour to translate your fund statements into a template like ours.

Example 1

From an ISA Stock & Shares Spreadsheet

  1. Income Distribution = Distribution of 314.22 GBP on 2023-12-07
  2. Income Distribution = Distribution of 136.86 GBP on 2023-07-06
  3. Rebalance Out = Sale of 41.719 units for 15.27 GBP per unit = 637.05 GBP on 2023-04-13
  4. … Rebalance In = Purchase of 2,152.74 units for 9.12 GBP per unit = 19,633 GBP on 2020-03-17

Example 2

There are no reinvestments in this example, but if a transaction were used to repurchase units, it would look like a Reinvestment of 135.86 GBP on 2023-07-06 to purchase X units.

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