muscleman Posted March 27, 2019 Share Posted March 27, 2019 Let's list all the tax traps for US investors so we can all benefit. Let me start: 1. PFIC: Passive foreign investment companies. This is the trickiest of all. It has to be a foreign company, with more cash and cash equivalent assets than other assets, and investment income. Banks and insurance companies excluded. Note that a lot of small biotech companies easily fit this category. Also some ETFs? Foreign mutual funds? If you bought a PFIC and didn't sell by the end of the year, then good luck. Filing returns per PFIC takes a long long time. https://en.wikipedia.org/wiki/Passive_foreign_investment_company Also, if you invest in a fund and the fund happens to own a PFIC, I wonder if that can cause big problems? 2. LP (limited partner): A lot of oil and gas companies are LP instead of corporations. They send you K1 that you have to fill out for tax filing, which is very annoying. Sometimes you could lose money trading LP shares, and at the same time, pay for the LP's share of income tax. 3. REITS? I don't have a good understanding of REIT. They seem like LPs, but will I get K1 forms? Or do I just treat it like a regular stock? They have to pay 90% of their income out, so dividend yield is usually high just like the LPs. Anything else? Link to comment Share on other sites More sharing options...
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