Hi, this is Anthony. Parents of Parent & Parent LLP, Iris Medic, and with me is our lead international attorney, Robert Hanson. Thanks for joining me today, Robert. Good to be here. Right on. So, we are talking about a tax court decision that came out. This is Robert Toso Marcellus Almond versus Commissioner, and we thought this was a really interesting case because the IRS gets hoisted by its own petard, and that's always fun to read, right? Um, it's a very interesting case because this is what happened: the IRS tried to open up a tax return audit to go back six years. However, in order to do that, the IRS has to show that the unreported income was greater than 25%. In this case, they got hung up because their own complicated rules on passive foreign investment companies put them in a situation where they're trying to argue that the adjusted gross income was substantially unreported. I think the first thing we need to do is understand what is a PFIC. Robert, what's a PFIC to you? Robert: A PFIC stands for passive foreign investment company. For most people, it's essentially a foreign mutual fund or investment fund. If the word "fund" is in there, it's probably a PFIC. There are other things that could potentially turn your own business holdings into a PFIC, but for the most part, think of it as a mutual fund that is not on the US market. Anthony: PFIC is a phrase that gets tossed around in many international law practices. Now, the reason why most people think of a PFIC as a foreign mutual fund is because this law was created in 1986. Wall Street was angry at foreign mutual funds because they didn't have the same compliance burdens as US mutual funds....
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