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Topic: Received shares as a company buyout and now super worried about PFIC  (Read 437 times)

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Hi all! I was working as a contractor for a startup based out of Europe and when the company was purchased, I was rewarded with some new shares from the new parent company. Parent company is based out of Norway, the shares are from the Oslo stock exchange, and I have them in a fund and share account with HL. These are individual shares of the new parent company but I was reading up on opening an ISA (have decided against it since we are planning on moving back to the US within 5/6 years) and am now terrified that by accepting these shares, I have opened myself up to notorious PFIC dealings.

Is this the case? Is it best if I just sell these off immediately and pay CGT on them? Any help on this would be very greatly appreciated!


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Re: Received shares as a company buyout and now super worried about PFIC
« Reply #1 on: September 10, 2021, 07:02:26 PM »
I would not think that PFIC rules apply to individual shares traded on the Oslo stock exchange unless the company meets the IRS definition of a PFIC. Hopefully someone will come along with a more definite answer.

https://www.investopedia.com/terms/p/pfic.asp

Quote
A passive foreign investment company (PFIC) is a corporation, located abroad, which exhibits either one of two conditions, based on either income or assets:


1. At least 75% of the corporation's gross income is "passive"—that is, derived investments or other sources not related to regular business operations.
2. At least 50% of the company's assets are investments, which produce income in the form of earned interest, dividends, or capital gains.

Dual USC/UKC living in the UK since May 2016


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Re: Received shares as a company buyout and now super worried about PFIC
« Reply #2 on: September 11, 2021, 06:59:30 AM »
Agree with durhamlad - unless this is an unusual company, it won't be a PFIC. There are some individual companies that make their money by owning other companies, making most of the income and/or assets passive. Think a non-US version of Berkshire Hathaway, or any of the investment trusts and REITs. Maybe also some bank-type companies with a heavy focus on the investment side compared to retail/corporate banking, lending, etc. - that's where it gets fuzzy.

But if it's a "normal" company that makes and sells some kind of good or service as it's core business, you should be fine.

No harm in an ISA if you stick to those kind of individual companies either, but if you're going back to the US in 5-6 years, I'm inclined to agree it's not worth the hassle. You'd still have to do all the US reporting on dividends, any capital gains, etc. since the US doesn't recognize the ISA, and it only makes sense for long term buy-and-hold of those individual stocks.


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