FTAI Aviation Ltd. Announces 2023 PFIC Annual Information Statement
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Insights
The designation of FTAI Aviation Ltd. as a Passive Foreign Investment Company (PFIC) is significant for U.S. investors due to the complex tax regulations that govern PFICs. A PFIC is a foreign corporation with a high level of passive income or passive assets and the U.S. tax implications for shareholders can be onerous without proper elections. The necessity for U.S. Holders to file a Form 8621 is an administrative burden that requires careful consideration of the tax consequences associated with PFIC investments.
One potential strategy to mitigate the adverse tax implications is making a Qualified Electing Fund (QEF) election. This allows U.S. investors to include their pro-rata share of the company's income in their gross income annually, thus converting potential future tax liabilities into a more favorable tax treatment. However, the decision to make a QEF election is not one-size-fits-all and depends on individual circumstances, including the investor's tax bracket, the expected return on the investment and the potential growth of FTAI.
FTAI's decision to post the PFIC Annual Information Statement online simplifies the process for U.S. Holders who wish to make a QEF election, providing them with the necessary information to comply with the IRS requirements. Nonetheless, the need for investors to consult their tax advisors underscores the complexity of PFIC rules and the importance of understanding the tax implications before making investment decisions.
From a financial perspective, the PFIC status can influence investor behavior and, consequently, the stock's liquidity and price. Investors may perceive PFICs as less attractive due to the additional tax burden and reporting requirements, potentially leading to a decrease in demand for FTAI's shares. This could impact the company's cost of capital and its ability to raise funds in the U.S. market.
On the other hand, the availability of the QEF election may mitigate some of these concerns for investors who are willing to comply with the additional reporting. In the long term, if FTAI manages to demonstrate strong performance and provides clear and accessible tax information, it might offset the initial negative sentiment associated with the PFIC designation.
It's also important to monitor whether the PFIC status is a transient issue or indicative of a broader trend in the company's income structure. Should the latter be the case, it could signal a strategic shift in FTAI's business model that warrants closer scrutiny from investors.
NEW YORK, March 21, 2024 (GLOBE NEWSWIRE) -- FTAI Aviation Ltd. (“NASDAQ: FTAI”) is considered a Passive Foreign Investment Company (“PFIC”) for the taxable year ended on December 31, 2023. If a U.S. Holder owns a PFIC, the U.S. Holder may be required to file a Form 8621. U.S. Holders should consider making a Qualified Electing Fund (“QEF”) election with respect to FTAI. FTAI will post a 2023 “PFIC Annual Information Statement” to its website at https://ir.ftaiaviation.com/tax-information. This information is necessary for U.S. Holders that wish to make a QEF election. Investors are urged to consult their tax advisors regarding implications of owning a PFIC.
About FTAI Aviation Ltd.
FTAI owns and maintains commercial jet engines with a focus on CFM56 and V2500 engines. FTAI’s propriety portfolio of products, including The Module Factory and a joint venture to manufacture engine PMA, enables it to provide cost savings and flexibility to our airline, lessor, and maintenance, repair, and operations customer base. Additionally, FTAI owns and leases jet aircraft which often facilitates the acquisition of engines at attractive prices. FTAI invests in aviation assets and aerospace products that generate strong and stable cash flows with the potential for earnings growth and asset appreciation.
The information contained on, or accessible through, any websites included in this press release is not incorporated by reference into, and should not be considered a part of, this press release.
For further information, please contact:
Alan Andreini
Investor Relations
FTAI Aviation Ltd.
(646) 734-9414
aandreini@fortress.com
FAQ
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