These Frequently Asked Questions (“FAQs”) are provided solely for the purpose of enhancing knowledge on tax matters. They do not provide accounting, tax, or other professional advice because they do not take into account any specific taxpayer’s facts and circumstances. Consult your tax advisor regarding tax implications of these items.
1. Will any U.S. taxes be withheld on my distributions?
If you are an “approved” PSRF beneficiary (meaning you have provided the required valid tax forms, e.g., Form W-9 or Form W-8, on a timely basis and completed the KYC process, or the KYC requirements have been formally waived), the PSRF trust does not expect any U.S. withholding tax on the distributions you receive. However, certain withholding requirements (including U.S. backup withholding) may still apply in limited circumstances.
2. When can I expect to have taxable income or loss that I need to report?
Generally, distributions from the PSRF trust do not constitute taxable events. Rather, for approved PSRF
beneficiaries, taxable events may occur when assets are transferred to the PSRF by the FTX Liquidating Trust. At that time, assuming you are an approved PSRF beneficiary, you are deemed to receive a portion of such assets allocable to your interest in the PSRF as an amount realized.
This amount will be reported to you on your annual grantor trust letters, which will be issued in accordance with applicable IRS deadlines. Gain or loss may not be determinable until all contributions to the PSRF have been completed, the timing of which remains uncertain. Whether you have gain or loss to report will depend on your relevant tax basis, and we recommend that you consult your tax advisor regarding these implications.
To the extent assets held in the PSRF earn income (e.g., interest), a portion of such income will also be allocable to you and the income will be reported on your grantor trust letters.
3. What tax forms or reporting will I receive?
The PSRF trust expects to issue annual grantor trust letters to PSRF beneficiaries. The grantor trust letters will describe the income of the PSRF trust that is taxable to each PSRF beneficiary, and any deductions, credits or elections that apply to this income. In addition, the PSRF expects to issue Forms 1042-S to non-U.S. PSRF beneficiaries and to the IRS with respect to certain U.S. source income earned by the PSRF.
4. How will taxable gains and losses and/or income I recognize in relation to my PSRF trust interest be
sourced?
The source of gain or loss you recognize due to amounts realized in relation to your PSRF trust interest may depend on your residence. We recommend you consult your tax advisor concerning the sourcing of such gain or loss. Otherwise, we expect the PSRF trust will only earn interest income on its cash reserves and we expect such amounts will be U.S. source income.