Excess distribution (PFIC)

Under the default PFIC rules for a US person, the whole gain on selling a foreign fund (and large distributions) is treated as an excess distribution: it is spread evenly over the days the fund was held, the share for the year of sale is ordinary income, and the share for each earlier year is taxed at that year's highest rate with an interest charge at the IRS underpayment rate. No long-term capital gain rate applies. The rules apply to United States persons, so they do not reach a sale made after US tax residence has ended.