Overview
Law360 quoted Aaron Nocjar in a January 26 article titled, "Power Shift In Proposed PFIC Rules Could Cause Headaches." The piece highlights newly proposed rules by the US Treasury Department that are the latest to treat domestic partnerships and S corporations as an aggregate of their partners and shareholders, rather than as separate entities, under the federal tax code for offshore income. The regulations expand this aggregate approach to passive foreign investment companies, or PFICs, by concluding that individual partners and shareholders will make their own tax decisions, including whether to treat certain earnings as capital gains rather than ordinary income.
Aaron highlights for Law360 that in some cases, by shifting the tax responsibility to partners and shareholders, "individual partners and shareholders may not be as well-equipped to deal with these tax decisions — either determining whether to make the decision or determining to make the decision in time." He continued, "In general, the tax functions at partnerships and S corporations are going to be more well-equipped and well-funded to make those decisions in a timely manner."
The full article can be read at Law360.
