Instructions For Form 8621 (Rev.december 2004) (Page 7 of 7) in pdf

interest.” Include this amount in your

events described on line 5. Earnings are

payable to the United States Treasury. If

check or money order payable to the

treated as distributed out of the most

you would otherwise receive a refund,

United States Treasury. If you would

recently accumulated earnings and

reduce the refund by the interest due.

otherwise receive a refund, reduce the

profits. Accordingly, an event will first

For individuals, enter the interest from

refund by the interest due.

terminate the most recently made

line 8 at the bottom right margin of Form

election.

1040, page 1, and label it as “Sec. 1294

An election may be terminated in

interest.” Also include this amount in your

Part V. Status of Prior Year

whole or in part depending on the event

check or money order payable to the

causing the termination. Examples are as

United States Treasury. If you would

Section 1294 Elections and

follows.

otherwise receive a refund, reduce the

•

Termination of Section

A distribution of earnings will terminate

amount of the refund by the amount of

an election to the extent the election is

interest due.

1294 Elections

attributable to the earnings distributed.

Lines 9 and 10. Complete lines 9 and 10

•

A loan, pledge, or guarantee by the

only if you have partially terminated your

Each person who has made a section

QEF made directly or indirectly to the

section 1294 election. Enter on line 9 the

1294 election must (1) annually report the

electing shareholder or related person will

part of the deferred tax outstanding after

status of that election and (2) report the

terminate an election to the extent of the

the partial termination of the section 1294

termination of any section 1294 election

undistributed earnings equal to the

election. This amount should equal line 3

that occurred during the tax year. See

amount loaned, secured, or guaranteed.

minus line 7.

Temporary Regulations section

•

A disposition of stock will terminate all

Enter on line 10 the accrued interest

1.1294-1T(h).

elections with respect to the undistributed

remaining after the partial termination of

Line 1. Enter the last day of each tax

earnings attributable to that stock.

the section 1294 election. This amount

•

year for which you made a section 1294

A change in status of the QEF will

should equal line 4 minus line 8.

election that is outstanding. Do not

terminate all elections.

include an election made in the current

For more information, see Regulations

tax year.

Paperwork Reduction Act Notice. We

section 1.1294-1T(e).

ask for the information on this form to

Line 2. Enter the undistributed earnings

Line 7. Enter the deferred tax due from

of the QEF for which the payment of tax

carry out the Internal Revenue laws of the

the termination of the section 1294

was extended by the section 1294

United States. You are required to give us

election. The deferred tax entered on line

the information. We need it to ensure that

election entered on line 1. If the election

3 is due if the election was completely

was partially terminated in a prior year,

you are complying with these laws and to

terminated. If the election was only

allow us to figure and collect the right

enter the remaining undistributed

partially terminated, a proportionate

earnings.

amount of tax.

amount of the deferred tax is due. That

Line 3. Enter the tax for which payment

You are not required to provide the

amount is determined by multiplying the

was extended by the section 1294

information requested on a form that is

amount entered on line 3 by a fraction, of

election entered on line 1. If the election

subject to the Paperwork Reduction Act

which the numerator is the amount

was partially terminated in a previous tax

unless the form displays a valid OMB

entered on line 6 and the denominator is

year, enter the balance of the deferred

control number. Books or records relating

the amount entered on line 2. The

tax.

to a form or its instructions must be

deferred tax is due by the due date of the

retained as long as their contents may

Line 4. Enter the accrued interest

shareholder’s income tax return (without

become material in the administration of

(determined under section 6621) on the

regard to extensions) for the year of

any Internal Revenue law. Generally, tax

deferred tax. This is the interest accrued

termination.

returns and return information are

from the due date (not including

When the election is terminated,

confidential as required by section 6103.

extensions) of the return for the year for

corporations include the deferred tax as

which the section 1294 election was

The time needed to complete and file

part of the total for Form 1120, Schedule

made until the date the current year’s

this form will vary depending on individual

J, line 11. Also enter the deferred tax to

return is filed.

circumstances. The estimated average

the left of line 11 and label it as “Sec.

time is:

Line 5. Enter the event(s) that occurred

1294 deferred tax.”

during the tax year that terminated one or

For individuals, enter the deferred tax

Recordkeeping . . . . . . . . . . 13 hr., 38 min.

more of the section 1294 elections

as part of the total for Form 1040, line 62.

reported on line 1. A section 1294

Learning about the law or the

Also enter the deferred tax to the left of

election may be terminated voluntarily.

form . . . . . . . . . . . . . . . . . . 6 hr., 27 min.

line 62, and label it as “Sec. 1294

However, an election will terminate

deferred tax.”

Preparing and sending the

automatically, in whole or in part, when

Line 8. Enter the interest accrued on the

form to the IRS . . . . . . . . . . . 6 hr., 57 min.

any of the following events occur:

•

deferred tax. Interest accrues beginning

An actual or deemed distribution of

If you have comments concerning the

on the due date (without regard to

earnings to which the election is

accuracy of these time estimates or

extensions) of your tax return for the tax

attributable (a loan, pledge, or guarantee

suggestions for making this form simpler,

year in which the section 1294 election is

by the QEF to or for the benefit of the

we would be happy to hear from you. You

made, and ending with the due date

taxpayer may cause a deemed

can write to the Internal Revenue Service,

(without regard to extensions) of your tax

distribution of the earnings);

Tax Products Coordinating Committee,

•

return for the tax year of the termination.

A disposition of stock in the QEF,

SE:W:CAR:MP:T:T:SP, 1111 Constitution

Interest is computed using the rates and

including a pledge by the taxpayer of

Ave. NW, IR-6406, Washington, DC

methods under section 6621.

stock as security for a loan; or

20224. Do not send the tax form to this

•

For corporations, enter the amount of

A change of status of the QEF (that is,

office. Instead, see When and Where To

section 1294 interest at the bottom right

a foreign corporation that is no longer a

File on page 1.

margin of Form 1120, page 1 and label it

QEF or PFIC).

as “Sec. 1294 interest.” Also include this

Line 6. Enter the earnings distributed or

amount in your check or money order

deemed distributed as a result of the

-7-

Instructions For Form 8621 (Rev.december 2004) Page 7

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