By i963208, April 12, 2012

Travis, This question is in regards to Sandstorm Gold. I don’t understand exactly what a PFIC is. Am I responsible for taxes on money that I have not even seen yet. Please explain or direct me to a website that explains this concept more clearly. I have quite a few shares and don’t want to be caught off guard with a huge tax bill.

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Travis Johnson, Stock Gumshoe
PFIC’s are Passive Foreign Investment Companies — the reporting and tax requirements were set up to prevent passive pass-through foreign corporations that folks used as tax shelters, but they also get applied to foreign mutual funds and some REITs and royalty-type foreign companies. Many companies with US investors declare their PFIC status, making a declaration of their opinion based on their understanding of IRS rules, but it’s apparently very complex and the specific measures are subject to some interpretation. Franco-Nevada, for example, declared that yes, they were a PFIC last year but that they do not expect to be one… Read more »
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