# Reporting Stocks and Shares ISA to IRS - no gains



## sjb2016 (May 18, 2016)

Hi All,

I know the stocks and shares ISA issue is discussed regularly here (well PFIC stuff anyway), but my searches haven't turned up anything relates specifically to reporting requirements when they have only made a loss at the time of sale. 

The situation is that my UKC/USC minor children have received about $7000 USD each from their UKC grandfather (we all live permanently in the UK, I'm soon to be dual as well). Initially I placed these into junior stocks and share ISAs and invested in an index fund. They have been invested since October 2015 and I sold them earlier this month at a loss when I realised what I had done (got entangled in the PFIC mess). 

So, my reading of the rules would indicate that I don't have to file any forms related to PFICs for US tax year 2015 or in US tax year 2016 because they made no money and are under the $25,000 reporting threshold and I have yet to declare them MTM or Excess Distributions (or whatever). 

I truly hope this is the case, although accept that I've probably read the rules with very rose tinted glasses on as I don't want to fill out extra paperwork. I feel like an idiot as I've never invested in anything other than a UK cash ISA because I knew this was an issue. I went temporarily insane. 

Any help, much appreciated!


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## BBCWatcher (Dec 28, 2012)

It appears you're able to skip Forms 3520 and 8621 for these assets since they're under the thresholds. See this analysis, checking the underlying citations.


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## sjb2016 (May 18, 2016)

Thanks for your reply. I had read that article previously and indeed helped me convince myself that I didn't need to file any paperwork around the accounts. However, I'm glad that you've read the same article and arrived at a similar conclusion. Of course, just because two reasonable people have read the article and the documents cited and arrived at a reasonable conclusion doesn't mean that the IRS will see it that way  

I suppose another question I have, is that the instructions for 8621 indicate that the di minimis exemption means I don't have to fill out section I of the form, does that mean I don't have to fill anything else out? Ugh.


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## BBCWatcher (Dec 28, 2012)

It appears the IRS issued some guidance (and new regulations) a couple years ago that allow you to skip Form 8621 for relatively small amounts of PFIC holdings in these or similar circumstances. I don't have any reason to disagree with that article, and some other information I found tends to support the same view.

Note that if either child or both children met the US$10,000 threshold for FinCEN Form 114 then you'd file that on their behalf. For example, if Child #1 had US$7,000 from this bequest and US$3,500 in a non-U.S. bank account (maybe for college savings), that'd be enough to trigger a FinCEN Form 114 filing. Which might be a happy problem to have since it means those funds get reported somewhere, and I don't think that's a bad thing.

Unfortunately it doesn't seem like you have the option to take their capital loss on your tax return unless they've got other income that would be enough to require them to file (but not so much to require them to file separately). IRS Publication 929 explains those rules. It might have been nice to be able to take that capital loss on your tax return, but I suppose that'd be asking for too much. 

By the way, are you calculating the loss based on the original cost basis? I think that's how you have to do it.


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## sjb2016 (May 18, 2016)

It was filling out my own FinCEN (that's an FBAR right?) that reminded me about these accounts in the first place as I am a signatory. Neither of my children need to report this year as this is the only money they've got, although rumour is more gifts are on the way, so probably next year. 

Not bothered about using the loss elsewhere, it was only about £100 and my total CG for last year were only about $200. I just want to not have to deal with any unnecessary IRS BS. Life is too short!


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