U.S. taxpayers with offshore investments should be wary of PFICs (Passive Foreign Investment Company). Many foreign nationals live and work in the United States. For those who invest in offshore companies that generate income in a passive nature (i.e. rents, royalties, interest, income from commodities or derivative trading) are permanent...
What is a PFIC and Why are the Taxes So High?
What is a PFIC and why are the taxes associated with PFICs so high? A Passive Foreign Investment Company or PFIC is classified by the IRS as a foreign corporation or entity who meets either an asset test or income test established by the agency. The asset test is based...
What is a PFIC and How Do Offshore Investments Lead to Higher Taxation?
What is a PFIC and how could your offshore investments actually lead to a higher taxation rate on earned income? A Passive Foreign Investment Company or PFIC is classified by the IRS in two ways: 75% or more of the income from the foreign corporation is classified as "passive income,"...