Has anyone gone through the life cycle of a PFIC investment, from investment through to sale, with the reporting in between?

Asked by:
Community Member
Mar 05, 2024
We are a VC fund considering making an investment in a PFIC and while I know there are reporting obligations during the investment period, what additional impacts are there from a tax standpoint around sale or divestment? 

Should we expect to pay additional taxes? Would these be passed on to LP's or charged at the Fund level? What strategies can be taken to mitigate any impacts?
1 answer
Accepted Answer
May 04, 2024
PFIC/CFC rules are complex and you may be required to distribute additional tax documentation to US investors, so you should reach out to your fund's tax provider to determine if your fund has any annual filing requirements. More info on PFIC below:

https://www.lexology.com/library/detail.aspx?g=e3626fb7-eb6b-4402-b9b8-aeb5f2a34816 https://www.amicorp.com/AmiNews/2017/july/US_tax_implications_and_reporting_requirements.php

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