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Tax Law (Questions About Taxes)/USA tax on foreign income investments


Scenario: I lived & worked in Oman (95-98) and invested $10k of Oman income in a non-USA fund.  I never had to pay USA tax on my Oman income because I was out of the USA for more than 330ish days per year (USA tax limit).  After returning to the USA, I never added money to that overseas fund.  The overseas fund was closed in 2013 by the fund managers (not by my choice) and they sent me the proceeds - about $30k. Do I now need to pay USA tax on the $30k, the $20k growth (30-10), or no tax at all?  Thanks for your assistance.

Hi Frank, did you file income tax returns for the years in question?

To answer your question, at a minimum US tax would be do on the growth, but it sounds like a good possibility that as a foreign mutual fund invested in an overseas brokerage account that your investment is considered a PFIC (see my article on What Is A PFIC? ). As such, significant reporting would have likely been due on an annual basis for your investment.

Best regards,

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Randall Brody, EA, MBA, CCP


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