# Form 8621 - Mark to Market election during first year of ownership



## sjb2016 (May 18, 2016)

Hello All,

I'm looking to fill out a Form 8621 for some marketable shares in some UK funds held in a children's ISA. 2016 is the first year that the funds were owned in, so I'm trying to take advantage and do the Mark to Market election. The value is low enough that I don't really have to report (under $25000) but I'd like to do this so that when my kids get control of the money when they're 18, they won't be responsible for a massive PFIC tax bill, and only pay U.S. tax on the gains in whatever year they sell. 

Is my understanding correct that there is no need to "purge" the shares of their "PFIC taint" because this is the first year of ownership and I'm making the MTM election in that year (there can be no excess distributions in the first year of ownership, unless of course you dispose of them for a gain in that year). 

If my understanding is correct, then on form 8621 under section I, question 5, I'd select (c) - MTM and enter $0 for excess distribution, then move along to Section IV recording the gains I made then adding them to my regular income for tax purposes. 

Does this sound right, I sure hope so!

Any help, much appreciated!

Regards,
Sam


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## Nononymous (Jul 12, 2011)

Other option, of course, is that if your kids don't have a US birthplace, they stay off the radar and never report the things, or anything else for that matter.


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## sjb2016 (May 18, 2016)

*Possibly an option, but not really*



Nononymous said:


> Other option, of course, is that if your kids don't have a US birthplace, they stay off the radar and never report the things, or anything else for that matter.


I did think about this option as they are both born in the UK, but, as required by U.S. law, they've got all their U.S passport and SSN, and I do claim them as dependents (so that I get almost $2000/year from Uncle Sam for no apparent reason). 

I'll need to file the paperwork every year, but really, because I need to file 1040s individually on their behalf (I can't attach 8621 to my return) then the gains are small enough that they won't be taxed, even as ordinary income, so aside from an hour or two of my time once a year, it feels best to keep it all reported as required.


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