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Requirement to File Informational Return Form 8621 Even If Below Filing Thresholds

Per the instructions for forms 8621, When and Where To File, Attach Form 8621 to the shareholder’s tax return (or, if applicable, partnership or exempt organization return) and file both by the due date, including extensions, of the return at the Internal Revenue Service Center where the tax return is required to be filed. If you are not required to file an income tax return or other return for the tax year, file Form 8621 directly with the Internal Revenue Service Center, Ogden, UT 84201-0201.

PFIC Background

Generally, a foreign corporation is a PFIC which exhibits either one of two conditions

  • Income test. 75% or more of the corporation’s gross income for the tax year is passive income (as defined in section 1297(b)). Which generally includes dividends, interest, rents, royalties, annuities and net gains from a certain property, commodities,  and foreign currency transactions
  • Asset test. At least 50% of the average  annual value of its total assets consist of income producing assets (determined under section 1297(e)) For example cash, working capital and non inventory investment in stock are generally considered to be passive income-producing assets

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