Instructions For Form 8621 printable pdf download

Department of the Treasury

Instructions for Form 8621

Internal Revenue Service

(Rev. December 2005)

(Use with the December 2004 revision of Form 8621.)

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.

1. File a Form 8621 for each PFIC in

that includes in income its pro rata share

General Instructions

the chain or

of subpart F income for stock of a CFC

2. Complete Form 8621 for the first

that is also a PFIC, generally will not be

Who Must File

PFIC and, in an attachment, provide the

subject to the PFIC provisions for the

information required on Form 8621 for

same stock during the qualified portion of

Generally, a U.S. person that is a direct or

each of the other PFICs in the chain.

the shareholder’s holding period of the

indirect shareholder of a PFIC must file

stock in the PFIC. This exception does

Form 8621 for each tax year in which that

not apply to option holders. For more

When and Where To File

U.S. person:

•

information, see section 1297(e).

Recognizes gain on a direct or indirect

Attach Form 8621 to the shareholder’s tax

disposition of PFIC stock,

Note. The attribution rules of section

return and file both by the due date,

•

Receives certain direct or indirect

1298(a)(2)(B) will continue to apply even

including extensions, of the return.

distributions from a PFIC, or

if the foreign corporation is not a PFIC

•

If you are not required to file an

Is making an election reportable in Part

under the CFC overlap rule.

income tax return or other return for the

I of the form.

tax year, file Form 8621 directly with the

Qualified Electing Fund (QEF)

A separate Form 8621 must be filed

Internal Revenue Service Center, P.O.

A PFIC is a QEF if the U.S. person who is

for each PFIC in which stock is held. See

Box 21086, Philadelphia, PA 19114.

a direct or indirect shareholder of the

Chain of ownership below for specific

PFIC elects (under section 1295) to treat

filing requirements.

Definitions and Special

the PFIC as a QEF. See the instructions

Indirect shareholder. Generally, a U.S.

Rules

for Election A on page 2 for information

person is an indirect shareholder of a

on making this election.

PFIC if it is:

Passive Foreign Investment

1. A direct or indirect owner of a

Tax Consequences for

Company (PFIC)

pass-through entity that is a direct or

Shareholders of a QEF

A foreign corporation is a PFIC if it meets

indirect shareholder of a PFIC,

•

A shareholder of a QEF must annually

either the income or asset test described

2. A shareholder of a PFIC that is a

include in gross income as ordinary

below.

shareholder of another PFIC, or

income its pro rata share of the ordinary

3. A 50%-or-more shareholder of a

1. Income test. 75% or more of the

earnings and as long-term capital gain the

foreign corporation that is not a PFIC and

corporation’s gross income for its taxable

net capital gain of the QEF.

that directly or indirectly owns stock of a

year is passive income (as defined in

•

The shareholder may elect to extend

PFIC.

section 1297(b)).

the time for payment of tax on its share of

2. Asset test. At least 50% of the

the undistributed earnings of the QEF

Interest holder of pass-through

average percentage of assets

(Election D) until the QEF election is

entities. The following interest holders

(determined under section 1297(f)) held

terminated.

must file Form 8621 under the

by the foreign corporation during the

•

The shareholder may make a deemed

circumstances described above:

taxable year are assets that produce

sale election (Election B) or a deemed

1. A U.S. person that is an interest

passive income or that are held for the

dividend election (Election C) to purge the

holder of a foreign pass-through entity

production of passive income.

section 1291 fund years from its holding

that is a direct or indirect shareholder of a

period.

Basis for measuring assets. When

PFIC,

determining PFIC status using the asset

2. A U.S. person that is considered

Note. A shareholder that receives a

test, a foreign corporation may use

(under sections 671 through 679) the

distribution from an unpedigreed QEF

adjusted basis if:

shareholder of PFIC stock held in trust,

(defined in Regulations section

1. The corporation is not publicly

and

1.1291-9(j)(2)(iii)) is also subject to the

traded for the taxable year and

3. A U.S. partnership, S corporation,

rules applicable to a shareholder of a

2. The corporation is (a) a CFC or (b)

trust (other than a trust that is subject to

section 1291 fund (see page 2).

makes an election to use adjusted basis.

sections 671 through 679 for the PFIC

Basis adjustments. A shareholder’s

stock), or estate that is a direct or indirect

basis in the stock of a QEF is increased

Publicly traded corporations must use

shareholder of a PFIC.

by the earnings included in gross income

fair market value when determining PFIC

and decreased by a distribution from the

status using the asset test.

Note. U.S. persons that are interest

QEF to the extent of previously taxed

holders of pass-through entities described

Look-thru rule. When determining if a

amounts.

in 3 above must file Form 8621 if the

foreign corporation that owns at least

pass-through entity fails to file such form

25% (by value) of another corporation is a

Section 1291 Fund

or the U.S. person is required to

PFIC, the foreign corporation is treated as

recognize any income under either

A PFIC is a section 1291 fund if:

if it held a proportionate share of the

section 1291 or section 1293.

assets and received directly its

1. The shareholder did not elect to

proportionate share of the income of the

treat the PFIC as a QEF or

Chain of ownership. If the shareholder

25%-or-more owned corporation.

owns one PFIC and through that PFIC

2. It is an unpedigreed QEF (as

owns one or more other PFICs, the

CFC overlap rule. A 10% U.S.

defined in Regulations section

shareholder must either:

shareholder (defined in section 951(b))

1.1291-9(j)(2)(iii)).

Cat. No. 10784P

Instructions For Form 8621

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