"A passive foreign investment company (PFIC) is a foreign-based corporation that exhibits either one of two conditions. The first condition, based on income, is that at least 75% of the corporation's gross income is "passive," income that is derived from investments rather than from the company's regular business operations. The second condition that determines a company as a PFIC, based on assets, is that at least 50% of the company's assets are investments that produce income in the form of earned interest, dividends or capital gains."