Elbit (Nasdaq:ELBT) today announced it is to be classified under the U.S. Internal Revenue Code as a passive foreign investment company
Such a classification means that most of its business comes from passive sources, such as income from interest. The company said that this classification applies to 2000 and 2001 and is relevant to American investors who own Elbit shares.
To qualify as PFIC, a firm has to be non-American, and over 50% of its assets have to be passive, or over 75% of its revenue has to be generated by passive sources.
To date only few companies trading in the United States have announced that they have been classified as PFIC, among them Metalink (Nasdaq:MTLK).
The new status has no impact on Elbit or its non-American shareholders. The Elbit PFIC classification is especially significant for individual American investors, given the American taxation system.
Elbit is owned by Elron Electronic Industries (Nasdaq:ELRN).