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Which are PFICs
Old 08-15-2006, 01:11 PM   #1
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Which are PFICs

This is one for BPP, Vagabond etc and anyone else who knows about PFICs.
I'm moving to the UK and I want some GBP denominated investments. I know
that PFICs are to be avoided, but I don't know for sure which investments
ate PFICs and which are not. So any idea which of the list below are PFICs?
The list starts with the invetsments I'm pretty sure are PFICs

Unit Trusts
OEICs
Invetment Trusts
EFT

Bond Funds
Uk Government Bonds, Gilts
Individual Stocks

Thanks
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Re: Which are PFICs
Old 08-15-2006, 05:59 PM   #2
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Re: Which are PFICs

Quote:
Originally Posted by nun
So any idea which of the list below are PFICs?
The list starts with the invetsments I'm pretty sure are PFICs

Unit Trusts
OEICs
Investment Trusts
ETF
Yes, these are definitely PFICs. (Assuming they are not registered in the US.)

Quote:
Bond Funds
A bond fund would also be a PFIC.

Quote:
Uk Government Bonds, Gilts
Individual Stocks
Individual bonds and gilts are no problem.

Individual stocks should generally be ok, but avoid anything which looks like it derives most of its income passively -- stock-holding or real estate-holding companies especially. Regarding the latter, I read a legal opinion on the web (for what that may be worth) that said for real-estate management/investment companies, the critical difference is probably whether the company does its own property management or subs it out. If it subs it out, then it is probably a PFIC. Also avoid start-ups and spin-offs which are still living on financing or gifts of stock and have not yet started making a living from operations.

I think the general question to ask is, "is this company really 'working' for a living, or is it just living off rents, dividends and capital gains?"

Anyway, that's my impression, worth what you paid for it.
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Re: Which are PFICs
Old 08-15-2006, 07:26 PM   #3
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Re: Which are PFICs

Thanks BPP
It looks like I'm going to have to be fairly conservative with my UK investing. I may buy a few UK blue chip shares, but I think most will go into UK National Savings Cetificates and Bonds

http://www.nsandi.com/products/cb/te...conditions.jsp

These are the UK equivalent of US savings Bonds, I-Bonds etc and looking at the T&Cs
above they should be ok. They are taxed at source so I suppose all I have to do is declare
that as foreign interest and as the UK rate is higher than the US I should have no tax to pay,
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