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Форма 8621 Інструкції

Інструкції щодо формування 8621, Повернення інформації акціонером Пасивної іноземної інвестиційної компанії або кваліфікованого фонду електрифікації

2022 р

Пов'язані форми

  • Форма 8621 - Повернення інформації акціонером Пасивної іноземної інвестиційної компанії або кваліфікованого фонду
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Department of the Treasury  
Internal Revenue Service  
Instructions for Form 8621  
(Rev. January 2022)  
(Use with the December 2018 revision of Form 8621.)  
Information Return by a Shareholder of a Passive Foreign Investment Company or  
Qualified Electing Fund  
Section references are to the Internal Revenue  
Code unless otherwise noted.  
its amended federal income tax return  
for the tax year to which it relates, if the  
U.S. shareholder can demonstrate that  
the reason for not filing the form with its  
original return was due to reasonable  
revised instructions that incorporate the  
changes made by the final regulations.  
Passive Foreign Investment  
Corporation (PFIC)  
Generally, a U.S. person that is a direct  
or indirect shareholder of a PFIC must  
file Form 8621 for each tax year under  
the following five circumstances if the  
U.S. person:  
Future Developments  
For the latest information about  
developments relating to Form 8621,  
and its instructions, such as legislation  
enacted after they were published, go to  
1. Receives certain direct or indirect  
distributions from a PFIC,  
Additional updates to these instruc-  
tions. With respect to certain amounts  
on Form 8621 that are reported on  
income tax returns, some of the  
What’s New  
New rules regarding the election to  
be treated as a Qualifying Insurance  
Corporation that a U.S. shareholder  
may apply retroactively. Final  
2. Recognizes gain on a direct or  
indirect disposition of PFIC stock,  
3. Is reporting information with  
respect to a Qualified Electing Fund  
(QEF) or section 1296 mark-to-market  
election,  
references to Form 1040 (on pages 11  
through 14 of these instructions) have  
been updated to reflect further redesign  
of Form 1040 for tax year 2021.  
regulations were issued under sections  
1297 and 1298 (T.D. 9936, 86 FR 4571,  
Jan. 15, 2021, as amended by T.D.  
9936, 86 FR 13648, Mar. 10, 2021). The  
regulations under section 1297 change  
the requirements for the election of a  
U.S. person that is a shareholder of a  
foreign corporation to treat stock of a  
foreign corporation as stock of a  
4. Is making an election reportable  
The line 16f instructions were  
modified to update the Revenue Ruling  
for the rates for interest determined  
under section 6621.  
in Part II of the form, or  
5. Is required to file an annual report  
pursuant to section 1298(f). See the  
Part I instructions, later, for more  
information regarding the person that  
must file pursuant to section 1298(f).  
Reminders  
Election to be treated as a Qualifying  
Insurance Corporation. A checkbox  
was added on page 1 of Form 8621 for  
shareholders of stock of a foreign  
corporation that elect to treat such stock  
as the stock of a qualifying insurance  
corporation under section 1297(f)(2),  
which was added by section 14501 of  
the Tax Cuts and Jobs Act (TCJA). For  
more information, see Election To Be  
Corporation, later.  
qualifying insurance corporation for the  
U.S. shareholder's tax years beginning  
on or after January 14, 2021, and for  
any open tax year in which the U.S.  
shareholder chooses to apply the new  
rules beginning after December 31,  
2017, and before January 14, 2021,  
provided the U.S. shareholder  
A separate Form 8621 must be filed  
for each PFIC in which stock is held  
directly or indirectly. In the case of a  
chain of ownership, under the five  
circumstances described above, unless  
otherwise provided, if the shareholder  
owns one PFIC and through that PFIC  
owns one or more other PFICs, the  
shareholder must file a Form 8621 for  
each PFIC in the chain.  
consistently applies the final regulation's  
insurance provisions to the foreign  
corporation for which the election is  
being made (Regulations sections  
1.1297-4 and 1.1297-6) for such year  
and all subsequent years. The new rules  
(1) expand the availability of the election  
to include a U.S. person who is  
A single Form 8621 may be filed  
with respect to a PFIC to report the  
information required by section 1298(f)  
(that is, Part I), as well as to report  
information in Parts III through VI of the  
form and to make elections in Part II of  
the form. For example, a U.S. person  
that has made a section 1296  
General Instructions  
Who Must File  
Qualifying Insurance  
Corporation  
A U.S. person that owns stock (or holds  
an option to purchase stock) of a foreign  
corporation and elects to treat such  
stock as the stock of a qualifying  
insurance corporation under the  
alternative facts and circumstances test  
within the meaning of section 1297(f)(2)  
and Regulations section 1.1297-4(d)  
must file a limited-information Form  
8621. For details, see Election To Be  
Corporation, later.  
considered to own stock in the foreign  
corporation by reason of holding an  
option; (2) provide a deemed election  
for small shareholders in publicly traded  
companies (as described in Regulations  
section 1.1297-4(d)(5)(iv)); (3) no longer  
require a U.S. shareholder making the  
election to attach a copy of the  
mark-to-market election with respect to  
a PFIC will file a single Form 8621 and  
complete Part I and Part IV.  
Indirect shareholder. Generally, a  
U.S. person is an indirect shareholder of  
a PFIC if it is:  
statement from the foreign corporation  
described in Regulations section  
A 50%-or-more shareholder of a  
1.1297-4(d)(5) to the Form 8621  
foreign corporation that is not a PFIC  
and that directly or indirectly owns stock  
of a PFIC,  
attached to its federal income tax return  
for the tax year to which it relates; and  
(4) allow a U.S. shareholder to make the  
election by attaching the Form 8621 to  
Dec 16, 2021  
Cat. No. 10784P  
 
A shareholder of a PFIC where the  
the stock in the PFIC. This exception  
does not apply to option holders. For  
more information, see section 1297(d).  
When and Where To File  
PFIC itself is a shareholder of another  
PFIC,  
Attach Form 8621 to the shareholder's  
tax return (or, if applicable, partnership  
or exempt organization return) and file  
both by the due date, including  
A 50%-or-more shareholder of a  
Note. The attribution rules of section  
1298(a)(2)(B) will continue to apply  
even if the foreign corporation is not  
treated as a PFIC with respect to the  
shareholder under section 1297(d).  
domestic corporation where the  
domestic corporation owns a section  
1291 fund, or  
extensions, of the return at the Internal  
Revenue Service Center where the tax  
return is required to be filed.  
If you are not required to file an  
income tax return or other return for the  
tax year, file Form 8621 directly with the  
Internal Revenue Service Center,  
Ogden, UT 84201-0201.  
A direct or indirect owner of a  
pass-through entity where the  
pass-through entity itself is a direct or  
indirect shareholder of a PFIC.  
Qualified Electing Fund (QEF)  
Election  
For more information on determining  
whether a U.S. person is an indirect  
shareholder, see Regulations section  
1.1291-1(b)(8).  
For purposes of these rules, a  
pass-through entity is a partnership, S  
corporation, trust, or estate.  
A PFIC is a QEF if a U.S. person who is  
a direct or indirect shareholder of the  
PFIC elects (under section 1295(b)) to  
treat the PFIC as a QEF and complies  
with the requirements described in  
section 1295(a)(2). See the instructions  
for Election A, later, for information on  
making this election.  
Definitions and Special  
Rules  
Passive Foreign Investment  
However, a U.S. person that owns  
stock of a PFIC through a tax-exempt  
organization or account described in the  
list below is not treated as a shareholder  
of the PFIC.  
Company (PFIC)  
A foreign corporation is a PFIC if it  
meets either the income or asset test  
described next.  
Tax Consequences for  
Shareholders of a QEF  
1. Income test. 75% or more of the  
corporation's gross income for its tax  
year is passive income (as defined in  
section 1297(b)).  
A shareholder of a QEF must  
An organization or an account that is  
annually include in gross income as  
ordinary income its pro rata share of the  
ordinary earnings of the QEF and as  
long-term capital gain its pro rata share  
of the net capital gain of the QEF.  
exempt from tax under section 501(a)  
because it is described in section  
501(c), 501(d), or 401(a).  
A state college or university  
2. Asset test. At least 50% of the  
described in section 511(a)(2)(B).  
A plan described in section 403(b) or  
average percentage of assets  
The shareholder may elect to extend  
(determined under section 1297(e))  
held by the foreign corporation during  
the tax year are assets that produce  
passive income or that are held for the  
production of passive income.  
the time for payment of tax on its share  
of the undistributed earnings of the QEF  
(Election B) until the QEF election is  
terminated.  
457(b).  
An individual retirement plan or  
annuity as defined in section 7701(a)  
(37).  
If the QEF election is not made with  
A qualified tuition program described  
respect to the first year of the  
Basis for measuring assets. When  
determining PFIC status using the asset  
test, a foreign corporation may use  
adjusted basis if:  
in section 529 or 530.  
shareholder’s holding period in the  
PFIC, the shareholder may be able to  
make a deemed sale election (Election  
D) or deemed dividend election  
(Election E) (if eligible). If the  
A qualified ABLE program described  
in section 529A.  
Interest holder of pass-through enti-  
ties. In general, the following interest  
holders must file Form 8621, unless an  
exception applies.  
1. A U.S. person that is an interest  
holder of a foreign pass-through entity  
that is a direct or indirect shareholder of  
a PFIC.  
1. The corporation is not publicly  
traded for the tax year; and  
shareholder properly makes a deemed  
sale election or deemed dividend  
election in connection with its QEF  
election, then the PFIC will become a  
pedigreed QEF (as defined in  
2. The corporation (a) is a controlled  
foreign corporation within the meaning  
of section 957 (CFC), or (b) makes an  
election to use adjusted basis.  
Regulations section 1.1291-9(j)(2)(ii))  
with respect to the shareholder.  
Publicly traded corporations must  
use fair market value when determining  
PFIC status using the asset test.  
2. A U.S. person that is considered  
(under sections 671 through 679) the  
shareholder of PFIC stock held in trust.  
Note. A shareholder that receives a  
distribution from an unpedigreed QEF  
(defined in Regulations section  
Look-thru rule. When determining if a  
foreign corporation is a PFIC, the  
foreign corporation is treated as if it  
directly held its proportionate share of  
the assets and directly received its  
proportionate share of the income of  
any corporation in which it owns at least  
25% of the stock (by value).  
CFC overlap rule. A 10% or more U.S.  
shareholder (defined in section 951(b))  
that includes in income its pro rata share  
of subpart F income for stock of a CFC  
that is also a PFIC will not generally be  
subject to the PFIC provisions for the  
same stock during the qualified portion  
of the shareholder's holding period of  
3. A U.S. partnership, S corporation,  
U.S. trust (other than a trust that is  
1.1291-9(j)(2)(iii)) is also subject to the  
rules applicable to a shareholder of a  
subject to sections 671 through 679 for  
the PFIC stock), or U.S. estate that is a  
direct or indirect shareholder of a PFIC.  
Basis adjustments. A shareholder's  
basis in the stock of a QEF, or in any  
property through which the shareholder  
is treated as owning stock of a QEF, is  
increased by the earnings included in  
gross income and decreased by a  
distribution from the QEF to the extent  
of previously taxed amounts.  
Note. U.S. persons that are interest  
holders of pass-through entities  
described in 3 above must file Form  
8621 if the pass-through entity fails to  
file such form or the U.S. person is  
required to recognize any income under  
section 1291.  
Instructions for Form 8621 (Rev. 01-2022)  
-2-  
 
organization, the rules of section 1291  
will apply only if a dividend from the  
PFIC would be taxable to the  
b. The excess, if any, of the amount  
of mark-to-market gain included in the  
gross income of the PFIC shareholder  
for prior tax years over the amount  
allowed such PFIC shareholder as a  
deduction for a loss with respect to such  
stock for prior tax years.  
Section 1291 Fund  
A PFIC is a section 1291 fund if:  
1. The shareholder did not elect to  
treat the PFIC as a QEF or make a  
mark-to-market election with respect to  
the PFIC, or  
2. The PFIC is an unpedigreed QEF  
(as defined in Regulations section  
1.1291-9(j)(2)(iii)).  
shareholder under subchapter F.  
Coordination of mark-to-market re-  
gimes with section 1291.  
Shareholders of a PFIC that is marked  
to market under section 1296 or any  
other Code provision may be subject to  
section 1291 in the first tax year in  
which the shareholder marks to market  
the PFIC stock. See Regulations  
See the instructions for Part II,  
Election C, and Part IV, later, for more  
information, including special rules that  
may apply in the year that a mark-to-  
market election is made.  
Basis adjustment. If the stock is held  
directly, the shareholder's adjusted  
basis in the PFIC stock is increased by  
the amount included in income and  
decreased by any deductions allowed. If  
the stock is owned indirectly through  
foreign entities, see Regulations section  
1.1296-1(d)(2).  
Tax Consequences for  
Shareholders of a Section 1291  
Fund  
sections 1.1291-1(c)(4) and 1.1296-1(i).  
Mark-to-Market Election  
Shareholders of a section 1291 fund are  
subject to special rules when they  
receive an excess distribution (defined  
below) from, or recognize gain on the  
sale or disposition of the stock of, a  
section 1291 fund. A distribution may be  
partly or wholly an excess distribution.  
The entire amount of gain from the  
disposition of a section 1291 fund is  
treated as an excess distribution.  
Excess distributions. An excess  
distribution is the part of the distribution  
received from a section 1291 fund in the  
current tax year that is greater than  
125% of the average distributions  
received in respect of such stock by the  
shareholder during the 3 preceding tax  
years (or, if shorter, the portion of the  
shareholder's holding period before the  
current tax year). No part of a  
A U.S. shareholder of a PFIC may elect  
to mark to market the PFIC stock under  
section 1296 if the stock is “marketable  
stock.” See the instructions for Election  
C, later, for information on making this  
election.  
Marketable stock. Marketable stock  
Additional Information  
Required  
is:  
PFIC stock that is regularly traded (as  
defined in Regulations section  
1.1296-2(b)) on:  
Reportable transaction disclosure  
statement. A 10% shareholder (by  
vote or value) of a QEF may also be  
required to file Form 8886 if the QEF is  
considered to have participated in a  
reportable transaction pursuant to  
Regulations section 1.6011-4(c)(3)(i)  
(G). See Form 8886, Reportable  
Transaction Disclosure Statement, and  
Regulations section 1.6011-4 for  
additional information.  
1. A national securities exchange  
that is registered with the Securities and  
Exchange Commission (SEC),  
2. The national market system  
established under section 11A of the  
Securities Exchange Act of 1934, or  
3. A foreign securities exchange  
that is regulated or supervised by a  
governmental authority of the country in  
which the market is located and has the  
characteristics described in Regulations  
section 1.1296-2(c)(1)(ii).  
distribution received or deemed  
received during the first tax year of the  
shareholder's holding period of the  
stock will be treated as an excess  
distribution.  
The excess distribution is determined  
on a per share basis and is allocated to  
each day in the shareholder's holding  
period of the stock. See section 1291(b)  
(3) for adjustments that are made when  
determining if a distribution is an excess  
distribution.  
Specific Instructions  
Important: All line references to Form  
1120 and Form 1040 are to the 2021  
forms. Other entities should use the  
comparable line on their tax return.  
Stock in certain PFICs described in  
Regulations section 1.1296-2(d).  
For additional information, including  
special rules for regulated investment  
companies (RICs) that own PFIC stock,  
see Regulations section 1.1296-1 and  
1.1296-2.  
Excepted Specified  
Foreign Financial Assets  
Reported  
Portions of an excess distribution are  
Tax Consequences  
After a PFIC shareholder elects to mark  
the stock to market under section 1296,  
the shareholder either:  
1. Includes in income each year an  
amount equal to the excess, if any, of  
the fair market value of the PFIC stock  
as of the close of the tax year over the  
shareholder's adjusted basis in such  
stock; or  
Check this box only if the Form 8621  
filer also files Form 8938, Statement of  
Specified Foreign Financial Assets, for  
the tax year and includes this form in the  
total number of Forms 8621 reported on  
line 4 of Part IV, Excepted Specified  
Foreign Financial Assets, of Form 8938.  
For more information, see the  
treated differently. The portions  
allocated to the days in the current tax  
year and the shareholder's tax years in  
its holding period before the foreign  
corporation qualified as a PFIC  
(pre-PFIC years) are taxed as ordinary  
income. The portions allocated to the  
days in the shareholder's tax years  
(other than the current tax year) in its  
holding period when the foreign  
Instructions for Form 8938, generally,  
and in particular, Duplicative Reporting  
and the specific instructions for Part IV,  
Excepted Specified Foreign Financial  
Assets.  
corporation was a PFIC are not included  
in income, but are subject to the  
separate tax and interest charge set  
forth in section 1291(c).  
2. Is allowed a deduction equal to  
the lesser of:  
a. The excess, if any, of the  
adjusted basis of the PFIC stock over its  
fair market value as of the close of the  
tax year; or  
See the instructions for Part V, later.  
Exempt organizations. If a  
shareholder of a PFIC is a tax-exempt  
Instructions for Form 8621 (Rev. 01-2022)  
-3-  
         
a publicly available statement (such as  
in a public filing, disclosure statement,  
(including stock owned indirectly) has a  
value of $25,000 or less ($50,000 or  
Election To Be Treated as  
a Qualifying Insurance  
Corporation  
or other notice provided to U.S. persons less in the case of a joint return) on the  
that are shareholders of the foreign  
corporation) that it satisfied the  
last day of the U.S. person's tax year  
and on any day during the tax year on  
which the U.S. person disposes of stock  
of the foreign corporation; and  
Who may make the election. A U.S.  
person that is a shareholder (or holds an  
option to purchase stock) of a  
requirements of section 1297(f)(2) and  
Regulations section 1.1297-4(d)(1)  
during the foreign corporation's  
If the U.S. person owns stock of the  
corporation that fails to qualify as a  
qualifying insurance corporation (QIC)  
(as defined in section 1297(f)(1)) solely  
because its applicable insurance  
liabilities make up 25% or less of its total  
assets may elect to treat the stock as  
stock of a qualifying insurance  
applicable reporting period (as defined  
in Regulations section 1.1297-4(f)(4)).  
This publicly available statement must  
include the same three items noted in  
foreign corporation indirectly through a  
domestic partnership, domestic trust,  
domestic estate, or S corporation (a  
domestic pass-through entity), the stock  
the first bulleted item above. However, a of the foreign corporation that is owned  
U.S. shareholder may not rely upon the  
foreign corporation’s statement  
by the domestic pass-through entity has  
a value of $25,000 or less on the last  
corporation under the alternative facts  
and circumstances test set forth in  
section 1297(f)(2) and Regulations  
section 1.1297-4(d) if:  
described in this bullet if the U.S. person day of the tax year of the domestic  
knows or has reason to know based  
upon reasonably accessible information  
that the statement was incorrect.  
pass-through entity that ends with or  
within the U.S. person's tax year and on  
any day during the tax year of the  
domestic pass-through entity on which it  
disposes of stock of the foreign  
corporation.  
For these purposes, stock is publicly  
traded if it would be treated as  
marketable stock within the meaning of  
section 1296(e) and Regulations  
section 1.1296-2 (without regard to  
Regulations section 1.1296-2(d)) if the  
election under section 1297(f)(2) is not  
made.  
1. The foreign corporation’s  
applicable insurance liabilities make up  
Note. The final regulations do not  
require the U.S. person to attach a copy  
of either of the above statements to  
Form 8621. See Regulations section  
1.1297-4(d)(5).  
at least 10% of its total assets; and  
2. Based on the applicable facts  
and circumstances, the foreign  
corporation is predominantly engaged in  
an insurance business, and its failure to  
satisfy the 25% threshold is due solely  
to runoff-related or rating-related  
circumstances involving such insurance  
business.  
When to make the election.  
Generally, the U.S. shareholder must  
make this election by the due date,  
including extensions, of the U.S.  
person’s tax return for the tax year for  
which the taxpayer is relying on the  
alternative facts and circumstances test  
within the meaning of section 1297(f)(2)  
and Regulations section 1.1297-4(d) to  
meet the definition of a qualifying  
insurance corporation. A U.S. person  
can attach the Form 8621 to an  
The U.S. shareholder may make the  
election under section 1297(f)(2) for its  
tax year if:  
Address and Identifying  
Number  
Address. Include the suite, room, or  
other unit number after the street  
address. If the post office does not  
deliver mail to the street address and  
the shareholder has a P.O. box, enter  
the box number instead.  
Identifying number. Individuals  
should enter a social security number or  
a taxpayer identification number issued  
by the IRS. All other entities should  
enter an employer identification number  
(EIN).  
Reference ID number. A reference ID  
number is required in the applicable  
entry space above Part I of the form only  
in cases where no EIN was entered for  
the PFIC, QEF, or QIC. However, filers  
are permitted to enter both an EIN and a  
reference ID number. If applicable, enter  
the reference ID number (defined  
below) you have assigned to the PFIC,  
QEF, or QIC.  
The foreign corporation directly  
provides the U.S. shareholder a  
statement, signed by a responsible  
officer of the foreign corporation or an  
authorized representative of the foreign  
corporation, that the foreign corporation  
satisfied the requirements of section  
1297(f)(2) and Regulations section  
1.1297-4(d)(1) during the foreign  
amended return for the tax year of the  
U.S. person to which the election relates  
if the U.S. person can demonstrate that  
the reason for not filing the form with its  
original return was due to reasonable  
cause.  
corporation's applicable reporting period  
(as defined in Regulations section  
1.1297-4(f)(4)). Specifically, if the  
foreign corporation failed to qualify as a  
QIC under section 1297(f)(1) solely  
because the ratio of applicable  
How to make the election. Follow  
these steps to make the election.  
1. Check the box on page 1 of Form  
8621.  
2. Provide the identifying  
insurance liabilities to total assets for  
the tax year is 25% or less, the  
information for the U.S. person and the  
foreign corporation (Name, Address,  
Identifying Number (if any)) only. You do  
not have to complete any other part of  
the Form 8621 if you are only filing the  
form to make this election.  
statement must (1) indicate that the ratio  
was at least 10%, along with a  
calculation of the ratio (with the resultant  
ratio double underlined); (2) include a  
statement indicating whether the failure  
to satisfy the 25% test was the result of  
runoff-related or rating-related  
Deemed election for publicly  
traded companies. A U.S. person who  
owns publicly traded stock in a foreign  
corporation will be deemed to make the  
election under section 1297(f)(2) with  
respect to the foreign corporation and  
its subsidiaries if the following  
A “reference ID number” is a number  
established by or on behalf of the U.S.  
person identified at the top of page 1 of  
the form that is assigned to a PFIC,  
QEF, or QIC with respect to which Form  
8621 reporting is required. These  
circumstances, along with a brief  
description of those circumstances; and  
(3) include information that establishes  
that the foreign corporation has met the  
“predominantly engaged in an insurance  
business” requirement described in  
Regulations section 1.1297-4(d)(2).  
requirements are satisfied.  
numbers are used to uniquely identify  
the PFIC, QEF, or QIC in order to keep  
track of the entity from tax year to tax  
The stock of the foreign corporation  
The foreign corporation (or its foreign  
that is owned by the U.S. person  
parent corporation on its behalf) makes  
Instructions for Form 8621 (Rev. 01-2022)  
-4-  
 
year. The reference ID number must  
the reference ID number, but must enter  
at least the EIN.  
Is treated as receiving an excess  
meet the requirements set forth below.  
distribution from the PFIC;  
Is treated as recognizing gain that is  
You must correlate the reference ID  
numbers as follows: New reference ID  
number [space] Old reference ID  
number. If there is more than one old  
reference ID number, you must enter a  
space between each such number. As  
indicated above, the length of a given  
reference ID number is limited to 50  
characters and each number must be  
alphanumeric and no special characters  
are permitted.  
Note. Because reference ID numbers  
are established by or on the behalf of a  
U.S. person filing Form 8621, there is no  
need to apply to the IRS to request a  
reference ID number or for permission  
to use these numbers.  
treated as an excess distribution as a  
result of a disposition of the PFIC;  
Is required to include an amount in  
income under section 1293(a) with  
respect to the PFIC, unless another  
shareholder through which the indirect  
shareholder owns the PFIC files under  
section 1298(f) with respect to the PFIC  
and no other exception applies;  
Note. In general, the reference ID  
number assigned to a PFIC, QEF, or  
QIC on Form 8621 has relevance only  
to Form 8621 and should not be used  
with respect to the PFIC, QEF, or QIC  
on other IRS forms.  
Requirements. The reference ID  
number must be alphanumeric (defined  
below), and no special characters or  
spaces are permitted. The length of a  
given reference ID number is limited to  
50 characters.  
For these purposes, the term  
“alphanumeric” means the entry can be  
alphabetical, numeric, or any  
combination of the two.  
The same reference ID number must  
be used consistently from tax year to tax  
year with respect to a given PFIC, QEF,  
or QIC. If for any reason a reference ID  
number falls out of use (for example, the  
PFIC, QEF, or QIC no longer exists due  
to disposition or liquidation), the  
Is required to include an amount in  
income under section 1296(a) with  
respect to the PFIC, unless another  
shareholder through which the indirect  
shareholder owns the PFIC files under  
section 1298(f) with respect to the PFIC;  
or  
Note. This correlation requirement  
applies only to the first year the new  
reference ID number is used.  
Part I. Summary of Annual  
Information  
Who Must Complete Part I  
Is required to report the status of a  
section 1294 election with respect to the  
PFIC.  
See Regulations section 1.1298-1(b)  
In general, all shareholders required to  
file Form 8621 under section 1298(f)  
and the regulations thereunder must  
complete Part I. However, a shareholder  
of a PFIC that is marked to market  
under a Code provision other than  
section 1296 (such as section 475) is  
not required to complete Part I unless it  
is subject to section 1291 with respect  
to the PFIC pursuant to Regulations  
section 1.1291-1(c)(4)(ii). See T.D.  
9806.  
(2) for further information.  
Domestic grantor trusts. In general,  
a U.S. grantor of a domestic grantor  
trust that owns an interest in a PFIC  
(directly or indirectly) through one or  
more foreign entities must complete  
Part I with respect to that PFIC interest.  
See Regulations sections 1.1291-1(b)  
(8)(iii)(D) and 1.1298-1(b)(1)(iii). In  
those circumstances, a domestic  
grantor trust is not required to complete  
Part I with respect to the stock of the  
PFIC that is owned by the grantor. For  
certain exceptions, see Regulations  
section 1.1298-1(b)(3)(i).  
reference ID number used for that PFIC,  
QEF, or QIC cannot be used again for  
another PFIC, QEF, or QIC for purposes  
of Form 8621 reporting.  
There are some situations that  
warrant correlation of a new reference  
ID number with a previous reference ID  
number when assigning a new  
reference ID number to a PFIC, QEF, or  
QIC. For example:  
Shareholders filing a joint return may  
file a single Form 8621 with respect to a  
single PFIC in which each joint filer  
owns an interest.  
Exceptions to Filing Part I  
A shareholder is exempt from  
completing Part I if it meets one of the  
exceptions described below.  
Shareholders that are the first U.S.  
person in the chain of ownership.  
Regulations section 1.1298-1 generally  
requires a U.S. person that is at the  
lowest tier in a chain of ownership (that  
is, the first U.S. person in the chain of  
ownership) and that is a shareholder  
(including an indirect shareholder) of a  
PFIC to complete Part I for each PFIC  
owned by that shareholder during the  
shareholder’s tax year.  
In the case of a merger or acquisition,  
Special rules for estates and trusts.  
Certain U.S. grantors and beneficiaries  
of estates and trusts may qualify for an  
exception to filing Part I.  
a Form 8621 filer must use a reference  
ID number that correlates the previous  
reference ID number with the new  
reference ID number assigned to the  
PFIC, QEF, or QIC.  
A U.S. grantor of a domestic grantor  
trust is not required to complete Part I if  
the trust is a domestic liquidating trust or  
a widely held fixed investment trust, as  
described in Regulations section  
1.1298-1(b)(3)(i). In these  
In the case of an entity classification  
election that is made on behalf of a  
PFIC, QEF, or QIC on Form 8832,  
Regulations section 301.6109-1(b)(2)(v)  
requires the PFIC, QEF, or QIC to have  
an EIN for this election. For the first year  
that Form 8621 is filed after an entity  
classification election is made on behalf  
of the PFIC, QEF, or QIC on Form 8832,  
the new EIN must be entered in the  
applicable entry space above Part I of  
Form 8621 and the old reference ID  
number must be entered in the  
Specific filing requirements apply  
with respect to domestic grantor trusts,  
as described further in these  
Instructions.  
circumstances, the domestic grantor  
trust is required to complete Part I.  
Exceptions to these filing  
In certain situations, a shareholder  
requirements are described below  
who is a member or beneficiary of (or  
participant in) an arrangement treated  
as a foreign pension fund under a U.S.  
income tax treaty that owns an interest  
in a PFIC is not required to complete  
Part I with respect to the PFIC. See  
Regulations section 1.1298-1(c)(4).  
Shareholders that are not the first  
U.S. person in the chain of owner-  
ship. In general, an indirect  
shareholder that is not the first U.S.  
person in the chain of ownership is not  
required to complete Part I unless the  
indirect shareholder:  
applicable entry space just below. In  
subsequent years, the Form 8621 filer  
may continue to enter both the EIN and  
A U.S. beneficiary of a foreign  
nongrantor trust or foreign estate is not  
Instructions for Form 8621 (Rev. 01-2022)  
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required to complete Part I with respect  
to the stock of the PFIC that is owned by  
the trust or estate unless it has made a  
QEF or section 1296 mark-to-market  
election, received an excess  
The entity will include the QEF earnings  
as income for the year in which the  
PFIC's tax year ends. The interest  
holder in the pass-through entity takes  
the income into account under the rules  
applicable to inclusions of income from  
the pass-through entity.  
Affiliated groups. The common parent  
of an affiliated group of corporations that  
joins in filing a consolidated income tax  
return makes the QEF election for all  
members of the affiliated group that are  
shareholders in the PFIC. An election by  
a common parent is effective for all  
members of the group that own stock in  
the PFIC at the time the election is  
made or any time thereafter.  
Line Instructions  
Line 1. Describe each class of shares  
held by the shareholder.  
Line 2. Provide the date during the tax  
year that the shares were acquired, if  
applicable.  
distribution, or recognized gain treated  
as an excess distribution with respect to  
the stock of the PFIC. See Regulations  
section 1.1298-1(b)(3)(ii).  
Line 3. List the number of shares held  
at the end of the tax year.  
Exempt organizations. In general, if  
a shareholder of a PFIC is a tax-exempt  
organization, the shareholder is  
Line 4. Indicate the value of the shares  
held at the end of the tax year.  
Shareholders may rely upon periodic  
account statements provided at least  
annually to determine the value of a  
PFIC unless the shareholder has actual  
knowledge or reason to know based on  
readily accessible information that the  
statements do not reflect a reasonable  
estimate of the PFIC’s value.  
required to complete Part I only if  
income derived with respect to the PFIC  
stock would be taxable to the  
shareholder under subchapter F. See  
Regulations section 1.1298-1(c)(1).  
Exception if aggregate value of  
shareholder’s PFIC stock is $25,000  
or less. A shareholder is not required  
to complete Part I with respect to a  
specific section 1291 fund if the  
For more information on who may  
make the election, see Regulations  
section 1.1295-1(d).  
Line 5. Indicate the type of PFIC and  
the amount of any excess distribution or  
gain treated as an excess distribution  
under section 1291, inclusion under  
section 1293, and inclusion or  
When To Make the Election  
shareholder meets the $25,000  
exception on the last day of the  
Generally, a shareholder must make the  
election to be treated as a QEF by the  
due date, including extensions, for filing  
the shareholder's income tax return for  
the first tax year to which the election  
will apply (the “election due date”). See  
shareholder’s tax year and the  
deduction under section 1296.  
shareholder does not receive an excess  
distribution from, or recognize gain on  
the sale or disposition of the stock of,  
the section 1291 fund. For purposes of  
determining whether a shareholder  
satisfies the $25,000 threshold, the  
shareholder takes into account all PFIC  
stock (QEFs, section 1291 funds, and  
PFIC stock subject to a section 1296  
mark-to-market election) owned directly  
or indirectly other than PFIC stock  
owned through another U.S. person or  
PFIC stock owned through another  
PFIC. Shareholders filing a joint return  
have a combined threshold of $50,000  
instead of $25,000 for purposes of this  
exception.  
Note. In cases in which a shareholder’s  
ownership interest in a PFIC is not  
denominated in shares, the shareholder  
must provide the information for lines 1  
through 4 based on its form of  
exceptions. The foreign corporation will  
be treated as a QEF with respect to the  
shareholder for the tax year in which the  
election is made and for each  
ownership in the PFIC.  
Part II. Elections  
A. Election To Treat the PFIC as  
a QEF (Section 1295 Election)  
subsequent tax year of the foreign  
corporation ending with or within a tax  
year of the shareholder for which the  
election is effective.  
Who May Make the Election  
Retroactive election. A shareholder  
may make a QEF election for a tax year  
after the election due date (a retroactive  
election) only if:  
Generally, a U.S. person that owns  
stock in a PFIC, directly or indirectly,  
may make Election A to treat the PFIC  
as a QEF.  
For more information, see  
The shareholder has preserved its  
Regulations section 1.1298-1(c)(2).  
right to make a retroactive election  
(described below), or  
Exception if the value of sharehold-  
er’s indirect PFIC stock is $5,000 or  
less. A shareholder is not required to  
complete Part I with respect to indirect  
ownership of a specific section 1291  
fund if the shareholder meets the  
Note. A separate election must be  
made for each PFIC that the  
shareholder wants to treat as a QEF.  
The shareholder obtains the  
permission of the IRS to make a  
retroactive election under the consent  
regime (described later).  
Exception. A tax-exempt organization  
that is not taxable under section 1291  
may not make the election. In addition, a  
tax-exempt organization that is not  
taxable under section 1291 is not  
subject to a QEF election made by a  
pass-through entity.  
Chain of ownership. In a chain of  
ownership, only the first U.S. person  
that is a direct or indirect shareholder of  
the PFIC may make the election.  
$5,000 exception with respect to the  
section 1291 fund on the last day of the  
shareholder’s tax year and the  
Protective statement regime.  
Under the protective statement regime,  
a shareholder may preserve the ability  
to make a retroactive election if the  
shareholder:  
1. Reasonably believed, as of the  
due date for making the QEF election,  
that the foreign corporation was not a  
PFIC for its tax year that ended during  
that year (retroactive election year);  
shareholder does not receive an excess  
distribution from, or recognize gain on  
the sale or disposition of the stock of,  
the section 1291 fund. For purposes of  
determining whether a shareholder  
satisfies the $5,000 threshold, the  
shareholder takes into account only the  
value of the shareholder’s proportionate  
share of the section 1291 fund.  
Pass-through entities. A QEF  
election made by a domestic  
2. Filed a Protective Statement (see  
partnership, S corporation, or estate is  
made in the pass-through entity's  
capacity as a shareholder of a PFIC.  
below) with respect to the foreign  
For more information, see  
corporation, applicable to the retroactive  
election year, in which the shareholder  
Regulations section 1.1298-1(c)(2).  
Instructions for Form 8621 (Rev. 01-2022)  
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describes the basis for its reasonable  
belief;  
3. Extended, in the Protective  
Statement, the periods of limitations on  
the assessment of taxes under the PFIC  
rules for all tax years to which the  
protective statement applies; and  
4. Complied with the other terms  
and conditions of the protective  
statements.  
3. Attach Form 8621 to a timely filed  
tax return (or, if applicable, partnership  
or exempt organization return).  
Documentation. For all tax years  
subject to the section 1295 election, the  
shareholder must keep copies of all  
Forms 8621, attachments, and PFIC  
Annual Information Statements or  
Annual Intermediary Statements. Failure  
to produce these documents at the  
request of the IRS may result in  
For each subsequent tax year in  
which the election applies and the  
corporation is treated as a QEF, the  
shareholder must:  
1. Complete the applicable lines of  
invalidation or termination of the section  
1295 election. See Regulations section  
1.1295-1(f)(2)(ii). In rare and unusual  
circumstances, the IRS will consider  
requests for alternative documentation  
to verify the ordinary earnings and net  
capital gain of the PFIC. For more  
information, see Regulations section  
1.1295-1(g)(2).  
Part III, and  
2. Attach Form 8621 to a timely filed  
tax return (or, if applicable, a  
partnership or exempt organization  
return).  
The Protective Statement must be  
attached to the shareholder's tax return  
for the shareholder's first tax year to  
which the statement will apply. For  
required content of the statement and  
other information, see Regulations  
section 1.1295-3(c).  
Annual Election Requirements of  
the PFIC or Intermediary  
B. Election To Extend Time for  
Payment of Tax  
Who May Make the Election  
PFIC Annual Information Statement.  
For each year of the PFIC ending in a  
tax year of a shareholder to which the  
QEF election applies, the PFIC must  
provide the shareholders with a PFIC  
Annual Information Statement. The  
statement must contain certain  
Consent regime. Under the  
consent regime, a shareholder that has  
not satisfied the requirements of the  
protective regime may request that the  
IRS permit a retroactive election. The  
consent regime applies only if:  
A shareholder of a QEF may make  
Election B to extend the time for  
payment of the tax on its share of the  
undistributed earnings of the fund for  
the current tax year. If a U.S.  
1. The shareholder reasonably  
relied on tax advice of a competent and  
qualified tax professional;  
2. The interest of the U.S.  
Government will not be prejudiced if the  
consent is granted;  
3. The shareholder requests  
consent before the PFIC status issue is  
raised on audit; and  
4. The shareholder satisfies the  
procedural requirements under  
Regulations section 1.1295-3(f)(4).  
information, including:  
1. The shareholder's pro rata share  
of the PFIC's ordinary earnings and net  
capital gain for that tax year, or  
2. Sufficient information to enable  
the shareholder to calculate its pro rata  
share of the PFIC's ordinary earnings  
and net capital gain for that tax year.  
partnership is a shareholder of a QEF,  
the election is made at the partner level.  
Special Rules  
If this election is made, interest will be  
imposed on the amount of the deferred  
tax. This interest must be paid on the  
termination of the election (see the  
instructions for Part VI, line 24, later).  
For other information required to be  
included in the PFIC Annual Information  
Statement, see Regulations section  
1.1295-1(g).  
Annual Intermediary Statement. If  
the shareholder holds stock in a PFIC  
through an intermediary, an Annual  
Intermediary Statement may be issued  
in lieu of the PFIC Annual Information  
Statement. For the definition of an  
“intermediary,” see Regulations section  
1.1295-1(j). For details on the  
The election cannot be made for any  
earnings on shares disposed of during  
the tax year or for a tax year that any  
portion of the shareholder's pro rata  
share of the fund's earnings is included  
in income under section 951 (relating to  
CFCs).  
For more information on making a  
retroactive election, see Regulations  
section 1.1295-3.  
Special Rules  
For rules relating to the invalidation,  
termination, or revocation of a section  
1295 election, see Regulations section  
1295-1(i). Also, see Regulations section  
1.1295-1(c)(2) for rules relating to the  
years to which a section 1295 election  
applies.  
When To Make the Election  
Generally, this election must be made  
by the due date, including extensions, of  
the shareholder's tax return for the tax  
year for which the shareholder reports  
the income related to the deferred tax.  
information that should be included in  
the Annual Intermediary Statement, see  
Regulations section 1.1295-1(g)(3).  
Combined statements. A PFIC that  
owns directly or indirectly any shares of  
stock in one or more PFICs may provide  
its shareholders with a PFIC Annual  
Information Statement in which it  
How To Make the Election  
For the tax year in which the section  
1295 election is made, the shareholder  
must do the following.  
How To Make the Election  
Take these steps to make this election.  
1. Check box B in Part II.  
combines its own required information  
and representations with the information  
and representations of any lower-tier  
PFIC. Similarly, an intermediary through  
which a shareholder indirectly holds  
stock in more than one PFIC may  
provide the shareholder with a  
2. Complete lines 8a through 9c of  
1. Check box A in Part II of Form  
Part III.  
8621.  
For more information on making  
Election B, see Temporary Regulations  
section 1.1294-1T.  
2. Complete the applicable lines of  
Part III. Include the information provided  
See Part VI for annual reporting  
requirements for outstanding section  
1294 elections.  
combined Annual Intermediary  
(see below) received from the PFIC.  
Statement. For more information, see  
Regulations section 1.1295-1(g)(4).  
Instructions for Form 8621 (Rev. 01-2022)  
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1296(j) and Regulations section 1.1296-  
1(i).  
2. Enter the gain or loss on line 15f  
of Part V.  
3. If a gain is entered, complete  
line 16 to report the tax and interest due  
on the excess distribution.  
C. Election To Mark to Market  
PFIC Stock (Section 1296  
Election)  
Who May Make the Election  
Generally, an election to mark to market  
PFIC stock under section 1296 may be  
made by:  
D. Deemed Sale Election in  
Connection With a QEF  
Election  
For more information regarding  
making Election D, see Regulations  
section 1.1291-10.  
Who May Make the Election  
This is a deemed sale election under  
section 1291(d)(2)(A). This election may  
be made by a U.S. person that elects to  
treat a PFIC as a QEF for a foreign  
corporation's tax year following its first  
tax year as a PFIC included in the  
shareholder's holding period (an  
unpedigreed QEF). A shareholder  
making this election is deemed to have  
sold the PFIC stock as of the first day of  
the PFIC's first tax year as a QEF (the  
qualification date) for its fair market  
value.  
A U.S. person who owns (or is treated  
as owning) marketable stock (defined  
earlier) in a PFIC at the close of such  
person's tax year, or  
E. Deemed Dividend Election in  
Connection With a QEF  
Election  
A RIC that meets the requirements of  
section 1296(e)(2).  
Who May Make the Election  
This is a deemed dividend election  
under section 1291(d)(2)(B). This  
election may be made by a U.S. person  
that elects to treat a PFIC that is also a  
CFC as a QEF for the foreign  
For more information, see section  
1296 and Regulations section 1.1296-1.  
See sections 1296(f) and (g) and  
Regulations sections 1.1296-1(e) and  
(h)(1)(ii) for information regarding stock  
owned through certain foreign entities.  
corporation's tax year following its first  
tax year as a PFIC included in the  
shareholder's holding period (an  
unpedigreed QEF).  
Special Rules  
When To Make the Election  
For purposes of this election, the  
This election must be made on or before  
the due date (including extensions) of  
the U.S. person's income tax return for  
the tax year in which the stock is  
marked to market under section 1296. A  
section 1296 election by a CFC is made  
by its controlling domestic shareholders  
(as defined in Regulations section  
1.964-1(c)(5)). For more information,  
see Regulations section 1.1296-1(h)(1)  
(ii). Once made, the election applies to  
all subsequent tax years unless the  
election is revoked or terminated  
pursuant to Regulations section  
following apply.  
A shareholder making this election is  
treated as receiving a dividend equal to  
its pro rata share of the post-1986  
The gain from the deemed sale is  
taxed as an excess distribution received  
on the qualification date.  
earnings and profits (defined below in  
Special Rules) of the PFIC on the  
The basis of the shareholder’s PFIC  
stock held directly, or the stock or other  
property owned directly by the  
qualification date (defined under the  
instructions for Election D, earlier). The  
deemed dividend is taxed as an excess  
distribution, allocated only to the days in  
the shareholder's holding period during  
which the foreign corporation qualified  
as a PFIC. For this purpose, the  
shareholder through which ownership of  
the PFIC is attributed to the  
shareholder, is increased by the gain  
recognized. The manner in which the  
basis adjustment is made depends on  
whether the shareholder is a direct or  
indirect shareholder. See Regulations  
section 1.1291-10(f).  
shareholder's holding period ends on  
the day before the qualification date.  
1.1296-1(h)(3).  
Solely for purposes of applying the  
Special Rules  
How To Make the Election  
Take these steps to make this election.  
1. Check box C in Part II.  
2. Complete either (a) Part V to  
calculate the amount due under section  
1291 (when required, as generally  
described in the next paragraph), or (b)  
Part IV to calculate the gain or loss on  
the stock in all other cases.  
PFIC rules, the shareholder's holding  
period of the stock begins on the  
qualification date.  
For purposes of this election, the  
following apply.  
The term “post-1986 earnings and  
The election may be made for stock  
profits” means the undistributed  
on which the shareholder will realize a  
loss, but that loss cannot be recognized.  
In addition, there is no basis adjustment  
for a loss.  
earnings and profits of the PFIC (as of  
the day before the qualification date)  
accumulated and not distributed in tax  
years beginning after 1986 during which  
the foreign corporation was a PFIC and  
while the shareholder held the stock  
(but without regard to whether the  
earnings relate to a period in which the  
PFIC was a CFC).  
After the deemed sale, the PFIC  
becomes a pedigreed QEF with respect  
to the shareholder.  
Coordination of Election C with sec-  
tion 1291 for first year of election. In  
general, when a shareholder makes a  
mark-to-market election for PFIC stock  
in a year other than the first year in  
When To Make the Election  
This election must be made by the due  
date, including extensions, of the  
shareholder's original tax return (or by  
filing an amended return within 3 years  
of the due date of the original return) for  
the tax year that includes the  
The basis of the shareholder's PFIC  
stock held directly, or the stock or other  
property owned directly by the  
which the shareholder holds stock in the  
PFIC and no QEF election is in effect,  
the PFIC stock is treated as sold at fair  
market value on the last day of the tax  
year for which the election is made, and  
the gain is treated as an excess  
shareholder through which ownership of  
the PFIC is attributed to the  
shareholder, is increased by the amount  
of the deemed dividend. The manner in  
which the basis adjustment is made  
depends on whether the shareholder is  
a direct or indirect shareholder. See  
Regulations section 1.1291-9(f).  
qualification date.  
distribution subject to section 1291. In  
addition, any distributions made during  
the year with respect to the PFIC stock  
are subject to section 1291. See section  
How To Make the Election  
Take these steps to make this election.  
1. Check box D in Part II.  
Instructions for Form 8621 (Rev. 01-2022)  
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Solely for purposes of applying the  
within 3 years of the due date, as  
extended under section 6081, of the  
original return) for the tax year that  
includes, as appropriate, either the  
termination date or qualification date.  
However, see Form 8621-A (and  
Regulations sections 1.1297-3(e) and  
1.1298-3(e)) if the 3-year period has  
expired.  
F. Deemed Sale Election With  
Respect to a Former PFIC or  
“Section 1297(e) PFIC”  
PFIC rules, the shareholder's holding  
period begins on the qualification date.  
Who May Make the Election  
When To Make the Election  
This is a deemed sale election under  
section 1298(b)(1) and Regulations  
section 1.1297-3(b) or 1.1298-3(b). This  
election may be made by:  
This election must be made by the due  
date (including extensions) of the  
shareholder's original tax return (or by  
filing an amended return within 3 years  
of the due date of the original return) for  
the tax year that includes the  
A U.S. person that is a shareholder of  
How To Make the Election  
Take these steps to make this election.  
1. Check box F in Part II.  
2. Enter the gain or loss on line 15f  
of Part V. If a gain, complete the rest of  
Part V.  
a foreign corporation that no longer  
qualifies as a PFIC under either the  
income or asset test of section 1297(a),  
or  
qualification date.  
How To Make the Election  
Take these steps to make this election.  
1. Check box E in Part II.  
A U.S. shareholder (as defined in  
section 951(b)) that owns stock in a  
foreign corporation that is a CFC and a  
PFIC, but that is not treated as a PFIC  
with respect to the U.S. shareholder  
under section 1297(d).  
2. Enter the dividend on line 15e of  
G. Deemed Dividend Election  
With Respect to a “Section  
1297(e) PFIC”  
Part V as an excess distribution.  
3. Complete line 16 to figure the tax  
and interest due on the excess  
distribution.  
Such persons may elect to treat the  
stock of the foreign corporation as sold  
for its fair market value on the last day of  
the last tax year of the foreign  
Who May Make the Election  
This is a deemed dividend election  
Attachments. The shareholder must  
attach a statement to Form 8621 that  
demonstrates the calculation of its pro  
rata share of the post-1986 earnings  
and profits of the PFIC that are treated  
as distributed to the shareholder on the  
qualification date. The post-1986  
earnings and profits may be reduced  
(but not below zero) by the amount that  
the shareholder satisfactorily  
under section 1298(b)(1) and  
Regulations section 1.1297-3(c). This  
election may be made by a shareholder  
that is a U.S. shareholder (as defined in  
section 951(b)) of a foreign corporation  
that is a CFC and a PFIC, but that is not  
treated as a PFIC with respect to the  
U.S. shareholder under section 1297(d).  
corporation in which it was treated as a  
PFIC (termination date) or the first day  
on which the qualified portion of the  
shareholder’s holding period in the  
section 1297(e) PFIC begins  
(qualification date), as applicable.  
Special Rules  
Special Rules  
demonstrates was previously included  
in its income or in the income of another  
U.S. person. The shareholder  
The gain from the deemed sale is  
A shareholder making this election is  
treated as receiving a dividend of its pro  
rata share of the post-1986 earnings  
and profits (defined later in  
taxed as an excess distribution.  
The basis of the shareholder’s PFIC  
demonstrates this by including in the  
statement mentioned above the  
stock held directly, or the stock or other  
property owned directly by the  
Attachments) of the section 1297(e)  
PFIC on the CFC qualification date (as  
defined in Regulations section  
following information:  
shareholder through which ownership of  
the PFIC is attributed to the  
The name, address, and identifying  
number of the U.S. person and the  
amount that was included in income;  
shareholder, is increased by the amount  
of the excess distribution taxed to the  
shareholder making Election F. The  
manner in which the basis adjustment is  
made depends on whether the  
1.1297-3(d)). The deemed dividend is  
taxed under section 1291 as an excess  
distribution, allocated only to the days in  
the shareholder’s holding period during  
which the foreign corporation qualified  
as a PFIC. For this purpose, the  
The tax year in which the amount was  
previously included in income;  
The provision of law under which the  
amount was previously included in  
income;  
shareholder is a direct or indirect  
shareholder. See Regulations sections  
1.1297-3(b)(5) and 1.1298-3(b)(5).  
shareholder’s holding period ends on  
the day before the CFC qualification  
date. After the deemed dividend  
A description of the transaction in  
which the shareholder acquired the  
stock of the PFIC from the other U.S.  
person; and  
Solely for purposes of applying the  
PFIC rules, the new holding period of  
the stock begins on the date after the  
termination date or on the qualification  
date, as applicable.  
election, the shareholder’s stock is not  
treated as stock in a PFIC.  
The provision of law under which the  
shareholder's holding period includes  
the holding period of the other U.S.  
person.  
For purposes of this election, the  
following rules apply:  
Election F may be made for stock on  
which there would be a loss, but the loss  
The basis of the shareholder’s PFIC  
is not recognized.  
stock held directly, or the stock or other  
property owned directly by the  
For more information on making  
Election E, see Regulations section  
1.1291-9.  
For more information on making this  
election, see Regulations sections  
1.1297-3(b) (section 1297(e) PFIC) and  
1.1298-3(b) (former PFIC).  
shareholder through which ownership of  
the PFIC is attributed to the  
shareholder, is increased by the amount  
of the deemed dividend. The manner in  
which the basis adjustment is made  
depends on whether the shareholder is  
a direct or indirect shareholder (as  
When To Make the Election  
This election must be made by the due  
date of the shareholder’s original tax  
return (or by filing an amended return  
Instructions for Form 8621 (Rev. 01-2022)  
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defined earlier). See Regulations  
section 1.1297-3(c)(6).  
The post-1986 earnings and profits  
may be reduced (but not below zero) by  
the amount that the shareholder  
the PFIC is attributed to the  
shareholder, is increased by the amount  
of the deemed dividend. The manner in  
which the basis adjustment is made  
depends on whether the shareholder is  
Solely for purposes of applying the  
PFIC rules, the shareholder’s new  
holding period begins on the CFC  
qualification date.  
satisfactorily shows was previously  
included in its income or in the income  
of another U.S. person. The shareholder a direct or indirect shareholder (as  
shows this by including in the statement  
mentioned above the following  
information:  
defined earlier). See Regulations  
section 1.1298-3(c)(6).  
When To Make the Election  
Solely for purposes of applying the  
Make this election by the due date of  
the shareholder’s original return (or by  
filing an amended return within 3 years  
of the due date, as extended under  
section 6081, of the original return) for  
the tax year that includes the first day on  
which the qualified portion of the  
The name, address, and identifying  
PFIC rules, the shareholder’s new  
holding period begins on the day  
following the termination date.  
number of the U.S. person and the  
amount that was included in income.  
A description of the transaction in  
which the shareholder acquired the  
stock of the Section 1297(e) PFIC from  
the other U.S. person.  
When To Make the Election  
This election must be made by the due  
date of the shareholder’s original return  
(or by filing an amended return within 3  
years of the due date, as extended  
under section 6081, of the original  
return) for the tax year that includes the  
first day on which the qualified portion of  
the shareholder’s holding period in the  
PFIC begins, as determined under  
section 1297(d). However, see Form  
8621-A (and Regulations section  
1.1298-3(e)) if the 3-year period has  
expired.  
shareholder’s holding period in the PFIC  
begins, as determined under section  
1297(d). However, see Form 8621-A  
(and Regulations section 1.1297-3(e)) if  
the 3-year period has expired.  
The tax year in which the amount was  
previously included in income.  
The provision of law under which the  
shareholder's holding period includes  
the holding period of the other U.S.  
person.  
How To Make the Election  
Take these steps to make this election.  
1. Check box G in Part II.  
For more information on making  
Election G, see Regulations section  
1.1297-3(c).  
2. Enter the excess distribution on  
H. Deemed Dividend Election  
With Respect to a Former PFIC  
Who May Make the Election  
line 15e of Part V.  
3. If the excess distribution is  
greater than zero, complete line 16 to  
figure the tax and interest due on the  
excess distribution.  
How To Make the Election  
Take these steps to make this election.  
1. Check box H in Part II.  
This is a deemed dividend election  
under section 1298(b)(1) and  
4. Attach to Form 8621 the  
Regulations section 1.1298-3(c). This  
election may be made by a shareholder  
of a foreign corporation that no longer  
qualifies as a PFIC under either the  
income or asset test of section 1297(a)  
if the foreign corporation was a CFC  
during its last tax year as a PFIC.  
2. Enter the excess distribution on  
information specified below.  
line 15e of Part V.  
3. If the excess distribution is  
greater than zero, complete line 16 to  
figure the tax and interest due on the  
excess distribution.  
Attachments  
The shareholder must attach a  
statement to Form 8621 that shows the  
calculation of its pro rata share of the  
post-1986 earnings and profits of the  
section 1297(e) PFIC (as defined in  
Regulations section 1.1291-9(j)(2)(v))  
that is treated as distributed to the  
shareholder on the CFC qualification  
date.  
4. Attach to Form 8621 the  
information specified below.  
Special Rules  
A shareholder making this election is  
treated as receiving a dividend of its pro  
rata share of the post-1986 earnings  
and profits (defined later in  
Attachments  
The shareholder must attach a  
statement to Form 8621 that shows the  
calculation of its pro rata share of the  
post-1986 earnings and profits of the  
former PFIC that is treated as  
distributed to the shareholder on the  
termination date.  
The CFC qualification date, as  
Attachments) of the former PFIC on the  
termination date (as defined in  
defined in Regulations section  
1.1297-3(d), for the Section 1297(e)  
PFIC.  
Regulations section 1.1298-3(d)). The  
deemed dividend is taxed under section  
1291 as an excess distribution,  
The beginning and ending dates of  
the tax year of the shareholder in which  
the CFC qualification date falls (that is,  
the election year).  
The termination date, as defined in  
allocated only to the days in the  
Regulations section 1.1298-3(d), for the  
former PFIC.  
shareholder’s holding period during  
which the foreign corporation qualified  
as a PFIC. For this purpose, the  
The shareholder’s pro rata share of  
The beginning and ending dates of  
the post-1986 earnings and profits of  
the Section 1297(e) PFIC that is treated  
as distributed to the shareholder on the  
CFC qualification date, including a  
schedule that shows the calculation of  
this amount as required under  
the tax year of the shareholder in which  
the termination date falls (that is, the  
election year).  
shareholder’s holding period ends on  
the termination date. After the deemed  
dividend election, the shareholder’s  
stock is not treated as stock in a PFIC.  
The shareholder’s pro rata share of  
the post-1986 earnings and profits of  
the former PFIC that is treated as  
distributed to the shareholder on the  
termination date, including a schedule  
that shows the calculation of this  
For purposes of this election, the  
following rules apply:  
Regulations section 1.1297-3(c)(5)(ii).  
In addition, if the shareholder filed a  
Form 5471 for the Section 1297(e) PFIC  
for the election year, attach Schedule J  
(Form 5471).  
The basis of the shareholder’s PFIC  
stock held directly, or the stock or other  
property owned directly by the  
amount as required under Regulations  
section 1.1298-3(c)(5)(ii). In addition, if  
shareholder through which ownership of  
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the shareholder filed a Form 5471 for  
the former PFIC for the election year,  
attach Schedule J (Form 5471).  
For this purpose, “undistributed  
earnings” is the excess, if any, of the  
amount included in gross income under  
section 1293(a) over the sum of the  
amount of any distribution and the  
portion of the amount attributable to  
stock in the QEF that you transferred or  
otherwise disposed of before the end of  
the QEF's tax year.  
Line 9b. Calculate your total tax as if  
your total taxable income did not include  
your share of the undistributed earnings  
of the QEF (line 8e). Enter this amount  
on line 9b.  
Line 9c. For corporations, enter this  
deferred tax on Form 1120, Schedule J,  
in brackets to the left of the entry space  
for line 11. Subtract this deferred tax  
amount from the sum of lines 7, 8, and  
10, and enter the difference on line 11.  
For individuals, enter this deferred  
tax on Form 1040 in brackets to the left  
of the entry space for line 24. Subtract  
this deferred tax amount from the sum  
of lines 22 and 23, and enter the  
difference on line 24.  
Lines 6b and 7b. Your share of the  
ordinary earnings and net capital gain of  
the QEF is reduced by the amounts you  
include in income under section 951 for  
the tax year with respect to the QEF.  
Your share of these amounts may also  
be reduced as provided in section  
1293(g).  
The post-1986 earnings and profits  
may be reduced (but not below zero) by  
the amount that the shareholder  
satisfactorily shows was previously  
included in its income or in the income  
of another U.S. person. The shareholder  
shows this by including in the statement  
mentioned above the following  
Line 6c. This amount is treated as  
ordinary income on your tax return.  
For a noncorporate taxpayer, include  
this amount as “other income” on  
Schedule 1 (Form 1040), line 8z, or on  
the comparable line of other  
information.  
The name, address, and identifying  
number of the U.S. person and the  
amount that was included in income.  
noncorporate tax returns. For a  
corporate taxpayer, include this amount  
as “other income” on line 10 of Form  
1120, or on the comparable line of other  
corporate tax returns.  
The tax year in which the amount was  
previously included in income.  
The provision of law under which the  
amount was previously included in  
income.  
Line 7c. See the instructions for the  
Schedule D used for your tax return.  
Portions of the net capital gain may  
have to be reported on different lines of  
Schedule D, depending upon the  
information provided by the QEF  
concerning the section 1(h) categories  
of net capital gains and amounts  
thereof, derived by the QEF. See  
Regulations section 1.1293-1(a)(2) for  
three options a QEF may use to report  
and calculate capital gain.  
A description of the transaction in  
which the shareholder acquired the  
stock of the former PFIC from the other  
U.S. person.  
The provision of law under which the  
shareholder’s holding period includes  
the holding period of the other U.S.  
person.  
Part IV. Gain or (Loss)  
From a Section 1296  
Mark-to-Market Election  
For more information on making  
Election H, see Regulations section  
1.1298-3(c).  
A shareholder that has made a  
Line 8  
mark-to-market election under section  
1296 with respect to PFIC stock  
completes lines 10a through 12 with  
respect to PFIC stock that the  
If you receive a distribution from the  
QEF during the current tax year, the  
distribution is first treated as a  
Part III. Income From a  
QEF  
For any tax year in which the foreign  
corporation is not treated as a QEF  
because it is not a PFIC under section  
1297(a), the shareholder is not required  
to complete Part III. However, the  
section 1295 election is not terminated.  
If the foreign corporation is treated as a  
PFIC in any subsequent tax year, the  
original election continues to apply and  
the shareholder must include in Part III  
its pro rata share of ordinary earnings  
and net capital gain and must also  
comply with the section 1295 annual  
reporting requirements.  
distribution out of the earnings and  
profits of the QEF accumulated during  
the year. If the total amount distributed  
(line 8b) exceeds the amount included  
in income (line 8a), the excess is treated  
as distributed out of the most recently  
accumulated earnings and profits. This  
amount is not taxable to you if you can  
satisfactorily demonstrate that the  
excess was previously included in your  
income or the income of another U.S.  
person. This is demonstrated by  
shareholder holds at the close of its tax  
year, and lines 13a through 14c, with  
respect to PFIC stock that it sold or  
disposed of during its tax year.  
As discussed earlier in  
Mark-to-Market Election, a shareholder  
may be required to complete Part V,  
rather than Part IV, in the first year in  
which a mark-to-market election is  
made. See section 1296(j) and  
Regulations sections 1.1291-1(c)(4) and  
1.1296-1(i).  
attaching a statement to Form 8621 that  
includes the information listed under  
Attachments for Election E, earlier. If the  
excess has not been previously  
Lines 10a Through 12  
All QEF shareholders complete lines  
6a through 7c. If you are making  
Election B, also complete lines 8a  
through 9c.  
If the fair market value of the PFIC stock  
as of the close of the tax year is more  
than the U.S. person's adjusted basis in  
the stock, the excess is treated as  
ordinary income.  
included in your income or the income  
of another U.S. person, then the excess  
is subject to tax according to the rules of  
section 301(c).  
Lines 6 and 7  
If the adjusted basis of the stock is  
more than the fair market value as of the  
close of the tax year, the excess is  
allowed as a deduction, but only to the  
extent of, the lesser of:  
Lines 6a and 7a. Enter on lines 6a and  
7a, respectively, your pro rata share of  
the ordinary earnings and net capital  
gain of the QEF. The PFIC should  
provide these amounts or information  
that will help you determine your pro  
rata share. See Annual Election  
Line 9  
Line 9a. Enter the total tax on your total  
taxable income (including your share of  
undistributed earnings of the QEF) for  
the tax year (for example, from Form  
1120, Schedule J, line 11; or Form  
1040, line 24).  
1. The amount of the excess  
(line 10c), or  
Intermediary, earlier.  
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(defined below) with respect to such  
stock (line 11).  
lines 14a and 14b, and, if applicable,  
line 14c.  
Line 14a. Enter any Unreversed  
inclusions with respect to the stock (see  
definition, earlier).  
has the same holding period  
(“applicable stock”). If you dispose of  
stock in a section 1291 fund for which  
you have different holding periods,  
complete line 15f for each block of  
shares that has the same holding  
period.  
This amount is treated as an ordinary  
loss and as a deduction allowable in  
computing adjusted gross income.  
Line 14b. Enter the loss from line 13c,  
but only to the extent of unreversed  
inclusions on line 14a. This loss is  
treated as ordinary loss. Corporations  
and individuals should include the loss  
on the “other income” line of their tax  
returns. Other entities should include  
this amount on the comparable line of  
their tax return.  
Line 14c. Enter the amount by which  
the loss on line 13c is more than the  
unreversed inclusions. This amount is  
subject to the rules generally applicable  
to losses provided elsewhere in the  
Code and regulations thereunder. See  
Regulations section 1.1296-1(c)(4)(ii).  
Unreversed inclusions. Unreversed  
inclusions are the excess of the  
Line 15  
Lines 15a and 15b  
Enter your total distributions from the  
section 1291 fund with respect to the  
applicable stock for the periods  
indicated.  
amounts that were included in income  
under the section 1296 mark-to-market  
rules for prior tax years over the  
amounts allowed as a deduction under  
the section 1296 mark-to-market rules  
for prior tax years. See section 1296(d)  
and Regulations section 1.1296-1(a)(3).  
Note. A 10%-or-greater domestic  
corporation shareholder might be able  
to claim a deemed paid foreign tax  
credit under section 902 with respect to  
a distribution from a section 1291 fund  
in the fund’s tax year beginning before  
January 1, 2018. See Form 1118,  
Foreign Tax Credits—Corporations, to  
calculate the taxes deemed paid and  
the gross-up amount.  
Line 15a. If the holding period of the  
applicable stock began in the current  
tax year, there is no excess distribution  
and you should complete Part V as  
follows: Enter on line 15a the total  
distributions you received from the  
section 1291 fund with respect to that  
stock during the current tax year. If you  
did not dispose of that stock during the  
tax year, do not complete the rest of  
Part V. If you did dispose of that stock  
during the tax year, skip lines 15b  
through 15e and complete lines 15f and  
16.  
Lines 10c and 12. Corporations and  
individuals should include the gain or  
(loss) on the “other income” line of their  
tax returns. Other entities should include  
this amount on the comparable line of  
their tax return. However, RICs, for  
purposes of section 851(b), should treat  
amounts included in income as a  
dividend.  
Multiple dispositions. In the case of  
multiple dispositions, attach a statement  
for each disposition using the same  
format shown on lines 13 through 14c.  
Then:  
If a CFC makes a section 1296  
mark-to-market election with respect to  
a PFIC in which it owns stock, any  
line 10c gain is treated as foreign  
personal holding company income and  
any line 12 loss is treated as a  
Enter “multiple” on lines 13a, 13b,  
and 14a.  
Enter your net ordinary gains on  
line 13c (do not enter any net losses on  
line 13c).  
deduction that is allocable to foreign  
personal holding company income.  
Enter your net ordinary losses on  
line 14b.  
Lines 13 Through 14c  
Enter your net “other” losses on  
Complete lines 13 through 14c if you  
sold or otherwise disposed of any  
section 1296 stock during the tax year.  
For purposes of lines 13 through 14c,  
“section 1296 stock” is any stock for  
which the taxpayer has made a  
line 14c.  
For more information relating to  
mark-to-market elections under section  
1296, see Regulations sections  
1.1296-1 and 1.1296-2.  
If the holding period of the applicable  
stock began in the current tax year, the  
line 15a amount is taxed according to  
the rules of section 301. To the extent  
that section 301(c)(1) is applicable,  
include the amount as a dividend on  
your income tax return. For  
mark-to-market election pursuant to  
section 1296(a), which is in effect for the  
tax year and for which the coordination  
rule of Regulations section 1.1296-1(i)  
does not apply.  
Part V. Distributions From  
and Dispositions of Stock  
of a Section 1291 Fund  
See Section 1291 Fund, earlier, for the  
definition of a section 1291 fund and  
also for a brief summary of the tax  
consequences for shareholders of a  
section 1291 fund.  
corporations, include this line 15a  
amount on Form 1120, Schedule C,  
line 14. For individuals, include this  
line 15a amount on Form 1040, line 3b  
(and, if applicable, on Schedule B (Form  
1040), line 5).  
Line 13c. If the fair market value of the  
stock on the date of sale or disposition  
(line 13a) is more than the U.S. person's  
adjusted basis in the stock on the date  
of sale or disposition (line 13b), the  
line 13c excess is a gain and is treated  
as ordinary income. Corporations and  
individuals should include the gain on  
the “other income” line of their tax  
returns. Other entities should include  
this amount on the comparable line of  
their tax return. However, RICs, for  
purposes of section 851(b), should treat  
this amount as a dividend.  
Also, see Section 1291 Fund and  
Mark-to-Market Election, earlier, for a  
brief discussion of when a shareholder  
may be subject to section 1291 in the  
year that it makes a mark-to-market  
election under any provision of the  
Code, including section 1296.  
Line 15c. Divide the amount on  
line 15b by 3. If the number of tax years  
in your holding period preceding the  
current tax year is less than 3, divide the  
amount on line 15b by that number.  
Line 15e  
Complete a separate Part V for each  
excess distribution. That is, if you  
receive a distribution from a section  
1291 fund with respect to shares for  
which you have different holding  
If the adjusted basis of the stock  
(line 13b) is more than its fair market  
value (line 13a), the excess is a loss  
and is entered on line 13c as such.  
Furthermore, the filer must complete  
Nonexcess distribution. The  
nonexcess distribution is the lesser of  
line 15a or line 15d. This amount is  
taxed according to the rules of section  
301. To the extent that section 301(c)(1)  
periods, complete lines 15a through 15e  
separately for each block of shares that  
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is applicable, include the amount as a  
dividend on your income tax return. For  
corporations, include this amount on  
Form 1120, Schedule C, line 14. For  
This amount is treated as ordinary  
income (for example, individuals and  
corporations should enter this amount  
on the “other income” line of their tax  
The excess distribution taxes are  
allocated in the same manner as the  
excess distribution is allocated. See  
Excess distributions, earlier. Those  
taxes allocated to pre-PFIC tax years  
and the current tax year are taken into  
account for the current tax year under  
the general rules of the foreign tax  
credit.  
The excess distribution taxes  
allocated to a PFIC year only reduce the  
increase in tax figured for that tax year  
(but not below zero). No carryover of  
any unused excess distribution taxes is  
allowed.  
When you dispose of PFIC stock, the  
above foreign tax credit rules apply only  
to the part of the gain that, without  
regard to section 1291, would be  
treated under section 1248 as a  
dividend.  
Line 16e. This amount is the total  
increase in tax and is included on your  
tax return as additional taxes.  
For individuals, include the amount  
as part of the total for Form 1040,  
line 16. Check box 3 on line 16 and  
enter “1291TAX” in the entry space for  
that box.  
For corporations, enter this amount  
on Form 1120, Schedule J, to the left of  
the entry space for line 2. Enter “Sec.  
1291” next to the amount and include it  
as part of the total for line 2. Other  
entities should use the comparable line  
on their income tax return.  
individuals, include this amount on Form return).  
1040, line 3b (and, if applicable, on  
Line 16c. Determine the increase in tax  
Schedule B (Form 1040), line 5).  
for each tax year in your holding period  
(other than the current tax year and  
Excess distributions. If you received  
more than one distribution during the tax pre-PFIC years). An increase in tax is  
year with respect to the applicable  
stock, the excess distribution is  
apportioned among all actual  
distributions. Each apportioned amount  
is treated as a separate excess  
distribution.  
determined for each PFIC year by  
multiplying the part of the excess  
distribution allocated to each year (as  
determined on line 16a) by the highest  
rate of tax under section 1 or section 11,  
whichever applies, in effect for that tax  
year. Add the increases in tax computed  
for all years. Enter the aggregate  
increases in tax (before credits) on  
line 16c.  
The following table sets forth the  
highest rate of tax in effect under  
section 1 (applicable to individuals) for  
calendar years 1987 through 2021.  
Line 15f. Gain recognized on the  
disposition of stock of a section 1291  
fund is treated as an excess distribution.  
Loss realized on the disposition of stock  
of a section 1291 fund is not taken into  
account under section 1291 and thus,  
for example, does not reduce the  
amount of total gain subject to section  
1291. However, the loss may be  
recognized under another provision of  
the Code and reported accordingly.  
Stock of a section 1291 fund is  
Tax Rates  
Tax year(s) (based  
on calendar year  
taxpayer)  
Highest rate of tax in  
effect under IRC  
section 1  
considered disposed of if it is sold,  
transferred, or pledged.  
2018–2021  
2013–2017  
2003–2012  
2002  
37%  
Line 16  
Lines 16a and 16b  
39.6%  
35%  
Determine the taxation of the excess  
distribution on a separate sheet and  
attach it to Form 8621. Divide the  
amount on line 15e or 15f, whichever  
applies, by the number of days in your  
holding period. The holding period of  
the stock is treated as ending on the  
date of the distribution or disposition.  
38.6%  
39.1%  
39.6%  
31%  
2001  
1993–2000  
1991–1992  
1988–1990  
1987  
Line 16f. Interest is charged on each  
net increase in tax for the period  
28%  
beginning on the due date (without  
regard to extensions) of your income tax  
return for the tax year to which an  
38.5%  
Special rules apply to the holding  
period if:  
increase in tax is attributable and ending  
with the due date (without regard to  
extensions) of your income tax return for  
the tax year of the excess distribution.  
Line 16d. To figure the foreign tax  
credit, the shareholder of a section 1291  
fund figures the total creditable foreign  
taxes attributable to the distribution.  
This amount includes the withholding  
taxes paid by the shareholder on the  
distribution and, in the case of the tax  
year of a section 1291 fund that begins  
before 2018, for 10%-or-greater  
The deemed dividend election  
(Election E) is made. See the  
instructions earlier for Election E.  
The mark-to-market election (Election  
The amount of interest is determined  
by using the rates and methods under  
section 6621. See section 1291(c)(3) for  
more information regarding the  
C) is made or was made in a prior year  
(see section 1291(a)(3)(A)(ii)).  
The deemed dividend election with  
respect to a Section 1297(e) PFIC  
(Election G) or with respect to a Former  
PFIC (Election H) is made. See the  
instructions for Election G and Election  
H, earlier.  
computation of interest, and also see  
Revenue Ruling 2021-17, 2021-37  
I.R.B. 362 (or successor Revenue  
Ruling) for a list of historical interest  
rates under section 6621.  
domestic corporate shareholders, any  
taxes deemed paid under section 902.  
These taxes must be creditable under  
general foreign tax credit principles, and  
the shareholder must choose to claim  
the foreign tax credit for the current tax  
year.  
The excess distribution taxes (the  
creditable foreign taxes attributable to  
an excess distribution) are determined  
by apportioning the total creditable  
foreign taxes between the part of the  
distribution that is an excess distribution  
and the part that is not.  
For individuals, include the interest  
Determine the amount allocable to  
each tax year in your holding period by  
adding the amounts allocated to the  
days in each such tax year. Add the  
amounts allocated to the pre-PFIC and  
current tax years. Enter the sum on  
line 16b.  
on Schedule 2 (Form 1040), line 17p.  
For corporations, include the interest  
as part of the total for Form 1120,  
Schedule J, line 9g. See the instructions  
for Form 1120, Schedule J, line 9g.  
Instructions for Form 8621 (Rev. 01-2022)  
-13-  
guarantee by the QEF to or for the  
benefit of the taxpayer may cause a  
deemed distribution of the earnings);  
regard to extensions) for the year of  
termination.  
Part VI. Status of Prior  
Year Section 1294  
When the election is terminated,  
corporations include the deferred tax as  
part of the total for Form 1120,  
A disposition of stock in the QEF,  
Elections and Termination  
of Section 1294 Elections  
including a pledge by the taxpayer of  
stock as security for a loan; or  
Schedule J, line 11. Also, enter the  
deferred tax to the left of line 11 and  
label it as “Sec. 1294 deferred tax.”  
Each person who has made a section  
1294 election must (1) complete lines  
17 through 20 to annually report the  
status of that election, and (2) complete  
lines 21 through 24 to report the  
termination of any section 1294 election  
that occurred during the tax year. See  
Temporary Regulations section  
1.1294-1T(h).  
A change of status of the QEF (that  
is, a foreign corporation that is no longer  
a QEF or PFIC).  
For individuals, include the deferred  
tax as part of the total for Schedule 2  
(Form 1040), line 17z. Enter “1294DT”  
and the amount of the deferred tax in  
the entry space for that line.  
Line 24. Enter the interest accrued on  
the deferred tax. Interest accrues  
beginning on the due date (without  
regard to extensions) of your tax return  
for the tax year in which the section  
1294 election is made and ending with  
the due date (without regard to  
Line 22. Enter the earnings distributed  
or deemed distributed as a result of the  
events described on line 21. Earnings  
are treated as distributed out of the  
most recently accumulated earnings  
and profits. Accordingly, an event will  
first terminate the most recently made  
election.  
An election may be terminated in  
whole or in part depending on the event  
causing the termination. Examples are  
as follows.  
Line 17. Enter the last day of each tax  
year for which you made a section 1294  
election that is outstanding. Enter as  
MM/DD/YYYY. Do not include an  
election made in the current tax year.  
Line 18. Enter the undistributed  
earnings of the QEF in the year for  
which the payment of tax was extended  
by the section 1294 election entered on  
line 17. If the election was partially  
terminated in a prior year, enter the  
remaining undistributed earnings.  
Line 19. Enter the tax for which  
payment was extended by the section  
1294 election entered on line 17. If the  
election was partially terminated in the  
previous tax year, enter the balance of  
the deferred tax from line 25 of the prior  
year Form 8621.  
Line 20. Enter the accrued interest  
(determined under section 6621) on the  
deferred tax. This is the interest accrued  
from the due date (not including  
extensions) of the return for the year for  
which the section 1294 election was  
made until the date the current year's  
return is filed.  
extensions) of your tax return for the tax  
year of the termination. Interest is  
computed using the rates and methods  
under section 6621.  
For corporations, enter the amount of  
section 1294 interest at the bottom right  
margin of Form 1120, page 1, and label  
it as “Sec. 1294 interest.” Also, include  
this amount in your check or money  
order payable to the United States  
Treasury. If you would otherwise receive  
a refund, reduce the refund by the  
interest due.  
For individuals, include the interest  
from line 24 on Schedule 2 (Form 1040),  
line 17q.  
Lines 25 and 26. Complete lines 25  
and 26 only if a section 1294 election is  
partially terminated. Enter on line 25 the  
part of the deferred tax outstanding after  
the partial termination of the section  
1294 election. This amount should  
equal line 19 minus line 23.  
A distribution of earnings will  
terminate an election to the extent the  
election is attributable to the earnings  
distributed.  
A loan, pledge, or guarantee by the  
QEF made directly or indirectly to the  
electing shareholder or related person  
will terminate an election to the extent of  
the undistributed earnings equal to the  
amount loaned, secured, or guaranteed.  
A disposition of stock will terminate all  
elections with respect to the  
undistributed earnings attributable to  
that stock.  
A change in status of the QEF will  
terminate all elections.  
For more information, see  
Regulations section 1.1294-1T(e).  
Line 23. Enter the deferred tax due  
from the termination of the section 1294  
election. The deferred tax entered on  
line 19 is due if the election was  
Line 21. Enter the event(s) that  
occurred during the tax year that  
terminated one or more of the section  
1294 elections reported on line 17. A  
section 1294 election may be  
completely terminated. If the election  
was only partially terminated, a  
Note. As indicated in the line 19  
instructions, for next year, be sure to  
enter the line 25 amount of this year’s  
Form 8621 on line 19 of next year’s  
Form 8621.  
Enter on line 26 the accrued interest  
remaining after the partial termination of  
the section 1294 election. This amount  
should equal line 20 minus line 24.  
proportionate amount of the deferred  
tax is due. That amount is determined  
by multiplying the amount entered on  
line 19 by a fraction, of which the  
numerator is the amount entered on  
line 22 and the denominator is the  
amount entered on line 18. The deferred  
tax is due by the due date of the  
terminated voluntarily. However, an  
election will terminate automatically, in  
whole or in part, when any of the  
following events occur:  
An actual or deemed distribution of  
earnings to which the election is  
attributable (a loan, pledge, or  
shareholder's income tax return (without  
Instructions for Form 8621 (Rev. 01-2022)  
-14-  
   
Disclosure, Privacy Act, and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the  
Internal Revenue laws of the United States. Sections 6001, 6011, 6012(a), and 6109, and their regulations, require you to  
provide this information. We need this information to ensure that you are complying with the Internal Revenue laws and to allow  
us to figure and determine the right amount of tax. You must fill in all parts of the tax form that apply to you. If you do not file a  
return under circumstances requiring its filing, do not provide the information we ask for, or provide fraudulent information, you  
may be charged penalties and be subject to criminal prosecution.  
We may disclose your tax information to the Department of Justice for civil and criminal litigation, and to cities, states, the  
District of Columbia, and U.S. possessions and commonwealths for use in administering their tax laws. We may also disclose  
to foreign countries pursuant to a treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law  
enforcement and intelligence agencies to combat terrorism.  
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless  
the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long  
as their contents may become material in the administration of any Internal Revenue law.  
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for  
individual taxpayers filing this form is approved under OMB control number 1545-0074 and the estimated burden for business  
taxpayers is approved under OMB control number 1545-0123. The estimated burden for all other taxpayers who file this form is  
shown below.  
Recordkeeping .  
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16 hr., 58 min.  
11 hr., 24 min.  
20 hr., 34 min.  
Learning about the law or the form  
Preparing and sending the form to the IRS .  
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we  
would be happy to hear from you. You can send us comments from IRS.gov/FormComments. Or you can write to the Internal  
Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the  
tax form to this office. Instead, see When and Where To File, earlier.  
Instructions for Form 8621 (Rev. 01-2022)  
-15-