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Topic: Passive shareholder

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	Ownership of Interest in Non-U.S. Corporations by Persons Who Are Residents of the United States: Watch Out for the ...
		Passive income includes, but is not limited to, interest, dividends, passive rents and royalties, net gains arising from the sale of property producing passive income, and the excess of foreign currency gains over foreign currency losses.
		A U.S. shareholder may elect to have the PFIC treated as a qualified electing fund (QEF), and as a result, the U.S. shareholder is freed from the onerous PFIC taxing regime.
		In other words, the U.S. shareholder will have a current-year income inclusion that is treated as ordinary income to the extent of his or her pro rata share of the QEF's ordinary income, and capital gains to the extent of his or her pro rata share of the QEF's net capital gain.
	www.us.kpmg.com /microsite/tax/ies/tea/winter2001/stories/article06.htm (3027 words)

	CPA Journal Online
		Taxpayers who were confidently creating passive activity income by renting property to their closely held C corporations suddenly found their passive income generator (PIG) had become a pig in a poke when the Treasury reversed its position in October 1994 and declared the income to be nonpassive.
		The temporary regulations allowed a taxpayer to generate passive activity income by renting property to his or her own C corporation or PSC while the final regulation does not.
		Following the proposed regulation for 1993 and 1994 leaves the taxpayer with an expired temporary regulation allowing passive income generation by a shareholder renting property to a closely held C corporation, followed immediately by an equally authoritative proposed regulation that is silent on the issue.
	www.nysscpa.org /cpajournal/1996/JAN96/f440196.htm (2015 words)

	Richard S. LeVine, Esq. - Attorney
		A foreign corporation with one or more U.S. shareholders is a PFIC if 75% or more of its income is passive income or if at least 50% of its assets would be invested in instruments which produce interest, dividends and/or capital gains.
		Generally, so long as the U.S. persons are deemed to be Ten Percent Shareholders with respect to that foreign corporation, income subject to both regimes it is treated as Subpart F income taxable under the CFC rules and is not taxed again as QEF income or as an excess distribution from a PFIC.
		In addition, each U.S. shareholder of a PFIC (which in the case of an S corporation includes both the corporation and its shareholders and in the case of a partnership includes both the partnership and its partners) must annually file Form 8621.
	taxhoncho.com /passive.htm (584 words)

	Should you bank on Subchapter S?
		Although evaluating shareholder limits may be a relatively easy process for the average community bank, some special rules should be considered in applying the shareholder limit.
		The election is valid only if all shareholders consent by the fifteenth day of the third month of the year of election (or no later than March 17, 1997, for an S corporation election for the 1997 tax year).
		Additionally, the basis of an S corporation shareholder's stock is increased upon the taxation of undistributed income, and decreased when the previously taxed income is distributed.
	www.banking.com /aba/community_1296.htm (2993 words)

	Internal Revenue Bulletin - January 9, 2006 - T.D. 9231
		A shareholder of a foreign corporation that is a former PFIC with respect to such shareholder may make the deemed dividend election under the rules of this paragraph (c) provided the foreign corporation was a controlled foreign corporation (as defined in section 957(a) (CFC)) during its last taxable year as a PFIC.
		The shareholder must attach a schedule to Form 8621 that demonstrates the calculation of the shareholder’s pro rata share of the post-1986 earnings and profits of the PFIC that is treated as distributed to the shareholder on the termination date pursuant to this paragraph (c).
		If the shareholder makes the deemed dividend election with respect to a PFIC of which it is an indirect shareholder, the shareholder’s adjusted basis of the stock or other property owned directly by the shareholder, through which ownership of the PFIC is attributed to the shareholder, is increased by the amount of the deemed dividend.
	www.irs.gov /irb/2006-02_IRB/ar09.html (2539 words)

	The Association Library: asl::passive::shareholder Class Reference (via CobWeb/3.1 planetlab2.cs.umd.edu) (Site not responding. Last check: 2007-10-14)
		Passive observers must derive shareholder to be able to use a passive.
		There is no automatic reference counting performed so it is important to make the appropriate call to rem_ref() when no longer using the passive.
		The pointer to the passive is not necessarily valid as the object may have been deleted.
	people.cs.tamu.edu.cob-web.org:8888 /lw/files/doc/asl_ref/classasl_1_1passive_1_1shareholder.html (189 words)

	[No title]
		Introduction A shareholder of a foreign corporation that qualifies as a PFIC under the income or asset test of section 1296 is subject to the special interest charge regime of section 1291 with respect to certain distributions by the PFIC and dispositions of the stock of the PFIC.
		The shareholder must attach a schedule to Form 8621 that demonstrates the calculation of the shareholder's pro rata share of the post-1986 earnings and profits of the PFIC that is treated as distributed to the shareholder on the qualification date pursuant to this section.
		Under that section, a shareholder (as defined in 1.1291-9(j)(3)) of a PFIC that is an unpedigreed QEF may elect to recognize gain with respect to the stock of the unpedigreed QEF held on the qualification date (as defined in paragraph (e) of this section).
	www.irs.gov /pub/irs-regs/td8701.txt (4918 words)

	Comment Letter to Treasury on Simplification of Tax Rules, July 2002
		In general, the level of a foreign corporation's passive assets should not be relevant under the PFIC rules, except to the extent that the assets either generate current passive income to the corporation or reflect the accumulations of current passive income within a lower-tier corporation.
		One objective of the fund-of-funds structure is to put the upper-tier fund shareholder in essentially the same position the investor would be in had he or she invested directly in each of the underlying lower-tier funds (rather than indirectly in these funds through the upper-tier fund).
		Under the passive asset test of section 1297(a)(2), US investors are required to determine whether 50 percent or more of a foreign corporation's assets (on average) produce or are held to produce passive income.
	www.ici.org /statements/cmltr/02_treas_tax_simplify_com_2.html (1491 words)

	Form 1120S Schedule K-1 Instructions
		The rental of a dwelling unit any shareholder used for personal purposes during the year for more than the greater of 14 days or 10% of the number of days that the residence was rented at fair rental value.
		When applicable, the passive activity limitations on losses are applied after the limitations on losses for a shareholder's basis in stock and debt and the shareholder's at-risk amount.
		If you are a calendar year shareholder in a fiscal year 2005–2006 corporation, enter these amounts on the corresponding lines of the tax form in use for 2006.
	www.cpawebsite.com /irsfiles/1120sk1ins.htm (11248 words)

	Taxpayer's Relief Act of 1997 - Passive Foreign Investment Companies
		Moreover, the rule applies for that portion of the shareholder's holding period with respect to the corporation's stock which is after December 31, 1997 and during which the corporation is a CFC and the shareholder is a U.S. shareholder.
		Accordingly, a shareholder that is subject to current inclusion under the subpart F rules with respect to stock of a PFIC that is also a CFC generally is not subject also to the PFIC provisions with respect to the same stock.
		The shareholder is allowed a deduction for the excess, if any, of the adjusted basis of the PFIC stock over its fair market value as of the close of the taxable year.
	rpifs.com /taxhelp/tax7m11c.htm (1958 words)

	Agency Financial Management 00/01
		The active shareholders ultimately are put in the untenable position of continuing to build the agency while some of that growth in value accrues to individuals who have little or no ability to contribute to that success.
		Fortunately, the shareholders' agreement contained a buy/sell provision, which enabled the passive shareholder to be bought out, although at a premium.
		In summary, while these examples of passive shareholder experiences may not be a common occurrence, they do, in fact, occur for the various reasons stated in these examples.
	www.roughnotes.com /rnmagazine/2000/january00/00p89.htm (815 words)

	JPMorgan Chase: Glossary
		A foreign company whose income is 75% passive or has over 50% of its assets in investments earning interest, dividends, and/or capital gains.
		A formal document signed by a shareholder to authorize another shareholder, or commonly the company's management, to vote the holder's shares at the annual meeting.
		When a group of shareholders are persuaded to join forces and gather enough shareholder proxies to win a corporate vote.
	investor.shareholder.com /jpmorganchase/glossary.cfm?FirstLetter=p (6112 words)

	Item 10. Additional Information (cont.)
		For this purpose passive income includes dividends, interest, royalties, rents, annuities and the excess of gain over losses from the disposition of assets which produce passive income.
		The U.S. Shareholder generally will be allowed an ordinary deduction for the excess, if any, of the adjusted basis of the PFIC stock over its fair market value as of the close of the taxable year, or the amount of any net mark-to-market gains recognized for prior taxable years, whichever is less.
		A U.S. Shareholder’s adjusted tax basis in the ordinary shares generally will be adjusted to reflect the amounts included or deducted under the mark-to-market election.
	www.checkpoint.com /corporate/ir/20f/38.htm (558 words)

	Passive Investing Does Not Mean Passive Ownership
		As an active shareholder, SSgA's role is to ensure that corporate policies serve the best interests of our clients.
		Our policy regarding corporate governance and voting at shareholder meetings provides for this active, informed participation in the management of those corporations in which we have the authority to vote.
		It is for this reason that we believe an active ownership strategy is essential regardless of whether the investment strategy is active or passive.
	ssga.com /library/povw/lochielcrafterpassiveinvesting20030205/page.html (789 words)

	Passive foreign investment company taxation
		To understand the problem, it helps to begin with a basic explanation of the tax treatment of U.S. shareholders of a mutual fund in the U.S. Generally, a U.S. mutual fund is treated in a manner similar to a partnership with respect to the income and the gains of the fund.
		The income is passed through to the shareholders in proportion to their holdings and reported to the IRS on a form 1099 by the mutual fund.
		If this election is made by the US shareholder, the shareholder must report as income his or her pro rata share of the earnings and capital gains of the QEF for the taxable year.
	www.rpifs.com /offshoretax/otpfic.htm (1450 words)

	HomebizBuzz - Legal advice and information for home businesses in New Zealand
		The problem of exit is only exaggerated in the case of a catastrophe: where one of the shareholders dies or is permanently mentally or physically incapacitated.
		The company loses one of its driving forces but that shareholder or his or her estate or trust (if the share ownership is held by trustees) remains as a shareholder.
		In some circumstances the remaining shareholder may be happy to continue to work for a passive shareholder.
	www.homebizbuzz.co.nz /article.php3?ArticleID=1022 (1310 words)

	[No title] (Site not responding. Last check: 2007-10-14)
		If the appraisal remedy excludes some, but not all, potential claims of a dissenting shareholder, the issue of whether all of the claims asserted fall within the exclusivity of the appraisal remedy requires an application of law to the facts, which is also subject to de novo review.
		A shareholder wishing to dissent from a proposed merger must comply with the provisions set forth in Section 53-15-4(A) by filing, "prior to or at the meeting of shareholders at which the proposed corporate action is submitted to a vote, a written objection to the proposed corporate action." Id.
		The plain language of Sections 53-15-3 and 53-15-4 allows a shareholder to dissent and obtain the fair value of his or her stock, but the dissenter cannot prevent or undo the merger in the absence of fraud or illegality.
	www.supremecourt.nm.org /opinions/VIEW/06ca-049.html (4128 words)

	Outline Chapter 21-Comprehensive Volume
		Shareholders are taxed annually on their pro rata share of S Corp. income regardless of whether the income is distributed.
		Per day method must be used unless a shareholder disposes of her entire interest, in which case, if all affected shareholders consent, a “closing of the books method” is used.
		Thus, a shareholder cannot deduct a loss from an S-corp. against active or portfolio income, unless they materially participate in the corporation.
	www.runet.edu /~wsaubert/Outlines/OutlineCh21.htm (1039 words)

	Print Article
		Bylaws are the internal rules that govern the day-to-day operations of a corporation, such as when and where the corporation will hold directors' and shareholders' meetings and what the shareholders' and directors' voting requirements are.
		A shareholders' agreement helps owners of a small corporation decide and plan for what will happen when one owner retires, dies, becomes disabled or leaves the corporation to pursue other interests.
		If you're selling shares of stock to passive investors (people who won't be involved in running the company), complying with state and federal securities laws gets complicated.
	www.bplans.com /c/print.cfm?i=90 (1376 words)

	Morningstar: Stocks, Mutual Funds, Investing and Personal Finance (Site not responding. Last check: 2007-10-14)
		An index fund loses nothing by voting against shareholder interests since all index funds are penalized equally, but a company like Fidelity has a lot to gain by voting against shareholder interests on their institutional side.
		Whether your individual interests are integrity and honesty, or environmental or social responsibility, shareholders should have influence in proportion to their ownership.
		07:32 PM I seems to me that an active manager or a passive manager has the incentive to be an active shareholder, but that an index fund manager gets no benefit from improving the performance of the companies she holds.
	socialize.morningstar.com /NewSocialize/Asp/FullConv.asp?forumId=F100000015&convSeqNumber=54793&mrr=1164410760 (1039 words)

	[No title]
		Tax year begins on the first day on which it acquires assets, has shareholders or begins business.
		Each shareholder of a new corp must consent.
		Computed as follows: Beginning of Year AAA Balance Plus: ordinary income separately stated income items (not tax-exempts) Minus (IN ORDER): expenses that are not deductible in determining ord.
	www.bus.ucf.edu /bobek/tax2/ch12.ppt (119 words)

	[No title]
		There will be a series of asset sales and restructurings in the media industry, and CEO John Malone is going to be right in the middle of it.
		Malone is no longer content to be a passive shareholder, and media investors should be better off because of it.
		IDT is also a plaintiff in several lawsuits that have the potential to generate judgments (or settlements) of $100 million to $500 million.
	www.algx.com /about/taking_stock.jsp (1051 words)

	Gabelli groups turn up heat on metals firm
		High-profile activist shareholder Mario J. Gabelli is shaking up local metals manufacturer Material Sciences Corp. and could push it onto the auction block if its stock price continues to languish.
		That was made clear in January when the Gabelli-affiliated investment firm disclosed its intention to nominate candidates to Material Sciences' board.
		Locally, his 2001 shareholder resolution calling on Warrenville-based truckmaker Navistar International Corp. to drop its poison pill led to termination of the anti-takeover measure.
	www.chicagobusiness.com /cgi-bin/article.pl?article_id=20018 (945 words)

	INTOSAI WGAP: The role and responsibility of the State as minority shareholder in a privatised business (Hungary) - ... (Site not responding. Last check: 2007-10-14)
		Until the date when it alienates its minority holdings, PSHC would be required to behave as a passive shareholder.
		In such cases a passive shareholder’s behaviour means, that the state owner (in this case: PSHC) votes together with the majority holder.
		It is worthy to consideration of follow, instead of passive behaviour, a more active, a more critical and from case to case a more aggressive behaviour for the companies, where though PSHC is in minority in mathematical terms, however it is the largest shareholder if considering its business position.
	www.nao.org.uk.cob-web.org:8888 /intosai/wgap/6thmeetinghungary.htm (2922 words)

	China The New Frontier For M&A \| Bowne Review (Site not responding. Last check: 2007-10-14)
		Issues of control often arise during negotiations because of this limitation, since acquirors rarely relish the role of a passive shareholder.
		Hoping for change, Citigroup has shareholder agreements in place, which would allow it to buy a controlling stake by 2006 if the regulations change.
		Among the other areas of concern cited by the author are the lack of transparency or adequate controls in the financial sector, communications breakdowns, inexperienced negotiators, culture clashes, and the high price tags of proven deal winners.
	www.bowne.com /newsletters/newsletter.asp?storyID=694 (604 words)

	The Association Library: aslbase.h File Reference (via CobWeb/3.1 planetlab2.cs.umd.edu) (Site not responding. Last check: 2007-10-14)
		Base class for an object that provides active and passive lifetime observation.
		Owners must derive shareholder to be able to access the reference count.
		This file is included indirectly by single.h and list.h and can be directly included by the user if only the base classes are needed.
	students.cs.tamu.edu.cob-web.org:8888 /lw/files/doc/asl_ref/aslbase_8h.html (99 words)

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