A Common Query

A common question asked by many NRIs includes – if they are in the U.S. for 3 to 4 years and are positive not to sell Indian MFs during that time, do they still have to go for the default option?

Kundra says, "According to this proposed amendment, if a US citizen or resident owning PFIC stock renounces citizenship or abandons US residency, thereby becoming a nonresident alien for US tax purposes, the individual is deemed to sell the PFIC stock on the last day that he or she is a US person."

She further says, "This is a proposal and not yet a law. Having said that, from the IRS website, proposed regulations are often used as precedents by the IRS. It is important to note that this will more than likely become law and when it does, it will apply retroactively."