Not from a tax professional and not advice. Just sharing an example for those who may find it useful. See if anyone has a different approach?
Background: Bought ETF from foreign exchange in 2015. Sold in 2021. ETF does not provide PFIC information statement. The shares never exceeded $25K during the holding period. No other PFIC holdings from 2015 to 2020. ETF issued annual dividend. No excess distribution (as defined as >125% of average of previous 3 years) based on dividends received. The only “distribution" is the gain from sale in 2021.
Approach:
1.File under section 1291. No other option.
2. 8621 Part 1, 5: check (a) for section 1291 and enter the dollar amount of the gain from sale
3. Part V: current year (2021) portion of the gain goes to 16b per instructions. Transfer the amount to Schedule 1 – Additional Income and Adjustments. Line 8 Other income
4. Part V: calculate increase in tax in 16c following instructions. Include the amount in Form 1040, line 16, Tax
5. Part V: calculate interest. Took a while to figure out. Found free web sites that help in calculating interest amounts. Transfer the amount to Schedule 2, line 17p
6. Do NOT enter the sale in Schedule D
7. Since the State does not treat foreign ETF differently, Take out the income and interest and re-instate the sale as a cap gain in state return. That’s it.
