PFIC Rules

Limit application of the PFIC rules. In 1997, the passive foreign investment company ("PFIC") rules were simplified by the elimination of the controlled foreign corporation-PFIC overlap and by allowing a mark-to-market election for marketable stock. A great deal of complication remains, however, and further simplification is necessary. We recommend, for example, that Congress eliminate the application of the PFIC rules to smaller investments in foreign companies whose stock is not marketable.