Passive Foreign Investment Company

About Passive Foreign Investment Company:

Passive Foreign Investment Company (PFIC) is a foreign corporation (whether or not a controlled foreign corporation) if (1) 75% or more of its gross income for the taxable year is passive activity income, or (2) at least 50% (by value) of its assets produce, or are held for the production of, passive income. For this purpose, passive income generally does not include active banking or insurance income. A U.S. shareholder of a PFIC may elect to include currently in income his or her pro-rata share of the PFIC's total earnings. If this election is not made in a timely manner, the U.S. shareholder is subject to an interest charge when he or she receives certain distributions of PFIC earnings or disposes of PFIC stock. Former IRC (check if this IRC provision is current here) §1296.