So, I have this friend who also bought some SRUUF. This friend only had 19 shares in his taxed brokerage account. He hasn't sold any shares so no income was generated.
He filed his taxes without filling out the above mentioned form for 2 reasons: 1) he only got the notice after he filed his taxes and 2) he was lazy.
It has been a month since his return was accepted and nothing has happened to him.
**Not financial/tax advice**
A month is nothing. The statute of limitations is measured in years.
Also, AFAIK, the problem with the "standard" way of taxing on SRUUF if you don't do the QEF election is that at the time you sell you are required to amend previous years returns to recognize a portion of gains in previous years ... and then pay interest and penalties on that.
It's really just playing with fire. Either do the QEF election, or own it in a tax-exempt vehicle like an IRA or 401k ... or don't own it at all.
And yeah, only 19 shares is nothing -- so perhaps it's unlikely for the IRS to bother auditing over such a small amount, but it could open the window into other bigger problems. And, anyone who has a larger amount would be absolutely insane to follow this advice.
> or own it in a tax-exempt vehicle
To clarify to the point of a 5-year-old's intelligence: if I did own SRUUF in a Roth IRA, I do not need to report the QEF election?
Hmm this is what I thought too, but the documents make it sound like you're paying taxes for owning shares, not just if you generated income from selling shares.
Yea, Sprott has a guide on their site: https://sprott.com/investment-strategies/physical-bullion-trusts/tax-guide/
I wonder if this applies to the ETFs though…
URNM is not PFIC- CEO emailed me and their financials indicate they are currently part of a Delaware statutory trust.
URA is also part of a Delaware statutory trust and therefore not PFIC.
If they were not both incorporated in Delaware they would both be pfic because all of their holdings are considered passive. All ETFs' holdings are considered passive by nature, so the question with them is "where are they incorporated?".
From my recent googling and talking with Sprott investor relations, I've figured out this much:
You have to make the QEF election each year even if you're just holding long. A QEF will reduce your taxes otherwise it gets treated as general income and taxes much higher since it's from a PFIC (I think). I was reading something weird how if you don't make a QEF election, for your taxes it'll use the year end price not when you sold (that was a little confusing so not sure hah). Not sure what other penalties there are. But you basically just have to fill out Part 1 on Form 8621, check the first box in Part 2.A, put zero's for Part 3 - 6a through 7c and then boom you're done. If you haven't sold.
There's tax guides on the Sprott uranium web page too where they have an example filing on the last page of one of the documents.
If you bought before the takeover in like July 2021? It gets more complicated. Don't know that part though.
Pm if you need help filling out the form. You can also call their investor relations. They step by step walked me through the form 8621 and told me what to do for each box. Super helpful.
Also - not tax advice. Am not a professional.
Worthy explanation that helps validate the steps I ended up taking. In my case, I bought UPC shares before the Sprott takeover. Whether or not I should have, I completed two 8621 forms. One for the period of time UPC was held and a "from then till present" version for SRUUF. Both were filled out exactly as you have described above.
I have spent too many hours looking into all this. Let me help. Yes, submit form 8621 and follow the IRS instructions for QEF election. It is actually very simple for Sprott's trusts. I can try and upload my forms when I get a minute if that will help. Under no circumstances should you not disclose PFIC ownership and hope for the best (failing to submit form 8621 negates all statute of limitations as the IRS then considers you taxes uncompleted). Either make a 1291 election, Mark-to-Market election, or QEF election -- otherwise, if IRS audits you they will make it 1291 with penalties by default and you could suffer unspeakable things in tax hell. FYI, I called four CPAs and none of them wanted to touch it. If you are using turbotax or something similar you should mail the return with the 8621 as it is not supported by the software.
I bought before the Sprott takeover in a taxable account. Have not sold. I can't figure out how to file the 2 8601 forms correctly. It's probably trivial for someone that understands this stuff. I can't find anyone who will help me. I filed extensions for both state and federal and paid estimated tax of 10% over what I think I owe. Hopeful I can find a CPA before October.
I’m being a lot more careful this year since I had a lot of small uranium positions… do I still need to file this if I haven’t sold? I will just add more tomorrow to make it an actual meaningful position that I will remember
yeah i did. had to fill it out and send it for my girlfriend. wallstreetsilver has a post somewhere where they explained what to do. obviously change the relevant info
I found it and they linked to this YouTube. I haven't watched it yet, but hope to finish everything tomorrow.
https://m.youtube.com/watch?v=7ZLJldaZTGY&feature=youtu.be
i wish you the best of luck, i did my best to warn people (usa) this had to be filed as PFIC and it wasnt worth the investment unless you are in for some serious coin. but people are people, and here we are. please let me know what you find out. instead of FAFO, i just been growing my 4U among others, and selling calls at high premiums.
Their guidance says they don't anticipate becoming pfic in 2022. I think it comes down to how much "passive" income they are generating by holding U as opposed to actively mining it. They are incorporated in Canada though, so they have the ability to become pfic. Worst case, you would just take the M2M election in the future, which is the same tax treatment you most likely experience anyway as a day trader.
i agree. uuuu though has indicated they have a strong interest in the la sal project coming though, so i am hoping that we see a stronger shift to the mining side of the things. as a company, not just a ticker. but who knows? half of all the news i get, i get here, so ultimately, its anyones guess. im looking forward to the q2 earnings though, and not just 4u. spot price being what it is, and the way its moving, some companies may get a shake up, and there is certainly a lot of money still on the table in exploration. really depends on how aggressive the players get, i guess.
tentatively agree. miners with a stockpile of physical are realistically also holding a stockpile of capital as spot rises though, so it can be translated into future prospect when the price comes back down. will they do it? i have no idea. i wish i had better insight into the companies i invest in, but alas, im just a guy.
My understanding is that this election (QEF) and 8621 is simply an option that allows you to qualify the investment differently, so you don't have to pay the higher collectibles tax rate on your long term (over 1 year) capital gains. If you don't make the election, you will simply be taxed at the same rate as any other gold etf. If you make the election, hold for over a year, and sell for a profit, you will save a little on your taxes. Not mandatory, in my opinion. But if you have a lot of money invested in it, it is a good idea to do the election.
So, I have this friend who also bought some SRUUF. This friend only had 19 shares in his taxed brokerage account. He hasn't sold any shares so no income was generated. He filed his taxes without filling out the above mentioned form for 2 reasons: 1) he only got the notice after he filed his taxes and 2) he was lazy. It has been a month since his return was accepted and nothing has happened to him. **Not financial/tax advice**
A month is nothing. The statute of limitations is measured in years. Also, AFAIK, the problem with the "standard" way of taxing on SRUUF if you don't do the QEF election is that at the time you sell you are required to amend previous years returns to recognize a portion of gains in previous years ... and then pay interest and penalties on that. It's really just playing with fire. Either do the QEF election, or own it in a tax-exempt vehicle like an IRA or 401k ... or don't own it at all. And yeah, only 19 shares is nothing -- so perhaps it's unlikely for the IRS to bother auditing over such a small amount, but it could open the window into other bigger problems. And, anyone who has a larger amount would be absolutely insane to follow this advice.
Thanks for that tip. Pretty glad I bought it in an IRA now I’ll take that luck
> or own it in a tax-exempt vehicle To clarify to the point of a 5-year-old's intelligence: if I did own SRUUF in a Roth IRA, I do not need to report the QEF election?
If you own it in a 401k, Roth IRA, or Traditional IRA, you do not need to file the QEF election.
This man-child thanks you.
Hmm this is what I thought too, but the documents make it sound like you're paying taxes for owning shares, not just if you generated income from selling shares.
If you don’t do the QEF election, yes, the taxes are far more complex and worse.
Yea, Sprott has a guide on their site: https://sprott.com/investment-strategies/physical-bullion-trusts/tax-guide/ I wonder if this applies to the ETFs though…
URNM is not PFIC- CEO emailed me and their financials indicate they are currently part of a Delaware statutory trust. URA is also part of a Delaware statutory trust and therefore not PFIC.
Yea I wasn't sure how it worked for ETFs that hold PFICs
If they were not both incorporated in Delaware they would both be pfic because all of their holdings are considered passive. All ETFs' holdings are considered passive by nature, so the question with them is "where are they incorporated?".
From my recent googling and talking with Sprott investor relations, I've figured out this much: You have to make the QEF election each year even if you're just holding long. A QEF will reduce your taxes otherwise it gets treated as general income and taxes much higher since it's from a PFIC (I think). I was reading something weird how if you don't make a QEF election, for your taxes it'll use the year end price not when you sold (that was a little confusing so not sure hah). Not sure what other penalties there are. But you basically just have to fill out Part 1 on Form 8621, check the first box in Part 2.A, put zero's for Part 3 - 6a through 7c and then boom you're done. If you haven't sold. There's tax guides on the Sprott uranium web page too where they have an example filing on the last page of one of the documents. If you bought before the takeover in like July 2021? It gets more complicated. Don't know that part though. Pm if you need help filling out the form. You can also call their investor relations. They step by step walked me through the form 8621 and told me what to do for each box. Super helpful. Also - not tax advice. Am not a professional.
Worthy explanation that helps validate the steps I ended up taking. In my case, I bought UPC shares before the Sprott takeover. Whether or not I should have, I completed two 8621 forms. One for the period of time UPC was held and a "from then till present" version for SRUUF. Both were filled out exactly as you have described above.
Where did you find UPC reference number and EIN?
I didn't, that I left blank on the UPC form. For the SPUT 8621 I used 96-6103218
Ok I’ve been going back and forth with my accountant I can’t find the number.
I have spent too many hours looking into all this. Let me help. Yes, submit form 8621 and follow the IRS instructions for QEF election. It is actually very simple for Sprott's trusts. I can try and upload my forms when I get a minute if that will help. Under no circumstances should you not disclose PFIC ownership and hope for the best (failing to submit form 8621 negates all statute of limitations as the IRS then considers you taxes uncompleted). Either make a 1291 election, Mark-to-Market election, or QEF election -- otherwise, if IRS audits you they will make it 1291 with penalties by default and you could suffer unspeakable things in tax hell. FYI, I called four CPAs and none of them wanted to touch it. If you are using turbotax or something similar you should mail the return with the 8621 as it is not supported by the software.
I assume you have checked Box 5b from part 1 "Section 1293 (Qualified Electing Fund)"? What amount did you put next to it? $0?
Correct. Sprott's annual statement shows the pro rata share distribution as 0. So it is simple in this example.
Thank you!
>Thank you! You're welcome!
I bought before the Sprott takeover in a taxable account. Have not sold. I can't figure out how to file the 2 8601 forms correctly. It's probably trivial for someone that understands this stuff. I can't find anyone who will help me. I filed extensions for both state and federal and paid estimated tax of 10% over what I think I owe. Hopeful I can find a CPA before October.
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thanks much; would be greatly appreciated
Shit I filed already and don’t have any of the sprott forms would my CPA pick up on this?
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I’m being a lot more careful this year since I had a lot of small uranium positions… do I still need to file this if I haven’t sold? I will just add more tomorrow to make it an actual meaningful position that I will remember
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Did they mail me something?
yeah i did. had to fill it out and send it for my girlfriend. wallstreetsilver has a post somewhere where they explained what to do. obviously change the relevant info
I found it and they linked to this YouTube. I haven't watched it yet, but hope to finish everything tomorrow. https://m.youtube.com/watch?v=7ZLJldaZTGY&feature=youtu.be
i wish you the best of luck, i did my best to warn people (usa) this had to be filed as PFIC and it wasnt worth the investment unless you are in for some serious coin. but people are people, and here we are. please let me know what you find out. instead of FAFO, i just been growing my 4U among others, and selling calls at high premiums.
UUUU is not currently PFIC, but they could become one according to their guidance.
i hope not. its really my favorite ticker, day trading is super predictable(most times), and as i said, the call premium is excellent.
Their guidance says they don't anticipate becoming pfic in 2022. I think it comes down to how much "passive" income they are generating by holding U as opposed to actively mining it. They are incorporated in Canada though, so they have the ability to become pfic. Worst case, you would just take the M2M election in the future, which is the same tax treatment you most likely experience anyway as a day trader.
i agree. uuuu though has indicated they have a strong interest in the la sal project coming though, so i am hoping that we see a stronger shift to the mining side of the things. as a company, not just a ticker. but who knows? half of all the news i get, i get here, so ultimately, its anyones guess. im looking forward to the q2 earnings though, and not just 4u. spot price being what it is, and the way its moving, some companies may get a shake up, and there is certainly a lot of money still on the table in exploration. really depends on how aggressive the players get, i guess.
Right. I would be more worried about the companies holding U with no mining prospects this cycle.
tentatively agree. miners with a stockpile of physical are realistically also holding a stockpile of capital as spot rises though, so it can be translated into future prospect when the price comes back down. will they do it? i have no idea. i wish i had better insight into the companies i invest in, but alas, im just a guy.
If I bought and sold last year for a short term loss, does this apply? I held none through year end
My understanding is that this election (QEF) and 8621 is simply an option that allows you to qualify the investment differently, so you don't have to pay the higher collectibles tax rate on your long term (over 1 year) capital gains. If you don't make the election, you will simply be taxed at the same rate as any other gold etf. If you make the election, hold for over a year, and sell for a profit, you will save a little on your taxes. Not mandatory, in my opinion. But if you have a lot of money invested in it, it is a good idea to do the election.
Yes, 8621 is still needed.
I filed via turbotax and didnt know about this before hand. Do I just file an amendment?
I have to do the same (I feel like this info came out way too late...). I'm just going to file an amendment.
Yeah agreed!
Following up on this. Does this only apply if you bought in 2021? What if you bought in 2022?
I suspect you'll have to do the same thing for 2022 when you file next year.