The Resource Classification of Canadian mutual funds for U.S. tax purposes

Classification of Canadian mutual funds for U.S. tax purposes

Label
Classification of Canadian mutual funds for U.S. tax purposes
Title
Classification of Canadian mutual funds for U.S. tax purposes
Creator
Subject
Language
eng
Summary
Canadians have invested over a trillion dollars in mutual funds. There is no IRS guidance on how the estimated one million US persons in Canada should report their mutual fund investments on their US tax returns. The general view is that Canadian mutual funds are corporations for US tax purposes and thus may be classified as passive foreign investment companies (PFICs). Such a classification entails complex reporting requirements and punitive tax consequences for a mutual fund investor unless the fund provides the information required to take the qualified electing fund (QEF) election. The onset of FATCA makes these issues more pressing both for individual investors and investment managers. This article explores the classification of Canadian mutual funds for US tax purposes. Canadian mutual fund corporations, which represent a very small subset of Canadian mutual funds, are likely to be classified as PFICs. Regardless of their default classification, Canadian mutual fund trusts are likely "foreign eligible entities" that may elect to be treated as a corporation or a partnership for US tax purposes
Citation source
In: International tax journal. - Chicago. - Vol. 40 (2014),
http://library.link/vocab/creatorName
Reed, M. (Max)
Geographic coverage
North America
Language note
English
http://library.link/vocab/subjectName
  • mutual fund
  • entity classification
  • passive foreign investment company
  • qualified electing fund
  • FATCA
Label
Classification of Canadian mutual funds for U.S. tax purposes
Instantiates
Publication
Label
Classification of Canadian mutual funds for U.S. tax purposes
Publication

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