My spouse is a US resident and owns shares in several overseas PFICs that are privately held companies. The company is owned by her aunt, and she is in discussions to sell the shares to her aunt personally. Her aunt has offered to buy the shares for far less than the current fair market value. We want to be rid of the shares as they have no distributions nor other value to us, and only cause tax reporting headaches.
If we agree to an amount less than the fair market value, do we still need to pay PFIC tax on the gain between our cost basis and the fair market value at the time of sale? Or is it considered a loss with no tax due?
Since this is likely considered a gift due to the close relationship, I tend to think that we'd still need to pay Section 1291 tax on the "gain" between FMV and sold price. Is that correct? Is there an IRS regulation for this specific scenario?
If we agree to an amount less than the fair market value, do we still need to pay PFIC tax on the gain between our cost basis and the fair market value at the time of sale? Or is it considered a loss with no tax due?
Since this is likely considered a gift due to the close relationship, I tend to think that we'd still need to pay Section 1291 tax on the "gain" between FMV and sold price. Is that correct? Is there an IRS regulation for this specific scenario?
Statistics: Posted by okane — Sun Sep 01, 2024 1:11 pm — Replies 2 — Views 99