Hello E. Pluribus Unum:
Thank you for your interest in Central Fund of Canada Limited.
Please go to our website, www.centralfund.com and click on "Financials".
Down the page, you'll come to Notice of U.S. Tax Information for U.S.
Persons. This is a statement we send out to brokers and shareholders to
inform you that Central Fund has No Ordinary Earnings and No Net Capital
Gains to pass onto our shareholders because we do not sell our bullion.
At the bottom of this statement , you will find a link to the IRS Form 8621
and instructions for completing it. You should file the IRS Form 8621 in
the first year that you hold CEF and in the year that you realize any gains
on the sale of the shares. The Form 8621 simply tells the IRS that you have
invested in a Passive Foreign Investment Company (PFIC) which has no income
and no capital gains from its holdings.
Just check off Box A of Part I (QEF Election) and then in Part II, 1a, b and
c AND 2a, b and c are all 'zero'. The zero comes from the Statement telling
you that Central Fund has NO ordinary earnings and NO capital gains.
Central Fund is a Canadian company and you can ask your US tax advisor for
help with this if need be.
Please get in touch if you have further questions.
Yours truly,
Marda Jeffrey, Investor Services
Central Fund of Canada Limited
905-648-7878
I suggest you check into the rule that IRA’s cannot invest in collectibles, including metals like gold and silver bullion unless they are in the custody of a qualified trustee as described in Internal Revenue Code Section 408(m). Such investments are taxed as immediate distributions from your IRA. It appears to me that holding a PFIC stock that holds bullion may fall within this rule.