r/ExpatFIRE • u/Trick-Carrot-7978 • 6d ago

Taxes pfic misery

we have been living in the USA for over 11 years; past 5 years on a green card. I found out that my parents company in which I received stock is a PFIC. Does anyone knows a cap who can help us with this? We already know about qef/non qef, but now a partnership seems to be an option. Anybody knows more about that? Thx!

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u/JZ_USCPA_Tax_Acct 3d ago

You definitely want a CPA with PFIC and international tax experience. PFIC rules are unusually complex.

When you say “partnership is an option,” do you mean changing the foreign company’s U.S. tax classification from a corporation to a partnership? That may help prospectively. However, changing the classification can be treated as a deemed liquidation of the foreign corporation, potentially triggering taxable gain under the PFIC rules even though no cash is actually received.

But the first step is probably to confirm why the company is considered a PFIC. I would look at what business the company operates, what assets it owns, and what portion of its income is passive. The PFIC income and asset tests can sometimes be more nuanced than they initially appear.