Instructions For Form 8621 (Page 6 of 7) in pdf

complete the rest of Part IV. If you did

allocated to the pre-PFIC and current tax

next to the amount and include it as part

dispose of that stock during the tax year,

years. Enter the sum on line 11b.

of the total for line 3. Other entities should

skip lines 10b through 10e and complete

use the comparable line on their income

This amount is treated as ordinary

lines 10f and 11.

tax return.

income (e.g., individuals and corporations

If the holding period of the applicable

should enter this amount on the “other

Line 11f

stock began in the current tax year, the

income” line of their tax return).

Interest is charged on each net increase

line 10a amount is taxed according to the

Line 11c

in tax for the period beginning on the due

rules of section 301. To the extent that

date (without regard to extensions) of

Determine the increase in tax for each tax

section 301(c)(1) is applicable, include

your income tax return for the tax year to

year in your holding period (other than the

the amount as a dividend on your income

which an increase in tax is attributable

current tax year and pre-PFIC years). An

tax return. For corporations, include this

and ending with the due date (without

increase in tax is determined for each

amount on Form 1120, Schedule C, line

regard to extensions) of your income tax

PFIC year by multiplying the part of the

13. For individuals, include this line 10a

return for the tax year of the excess

excess distribution allocated to each year

amount on Form 1040, line 9a (and, if

distribution.

(as determined on line 11a) by the

applicable, on Schedule B (Form 1040),

For individuals, enter the interest at the

highest rate of tax under section 1 or

line 5).

section 11, whichever applies, in effect for

bottom right margin of Form 1040, page 1

Line 10c

that tax year. Add the increases in tax

and label it as “Sec. 1291 interest.”

Divide the amount on line 10b by 3. If the

Include this amount in your check or

computed for all years. Enter the

number of tax years in your holding

aggregate increases in tax (before

money order payable to the United States

period preceding the current tax year is

credits) on line 11c.

Treasury. If you would otherwise receive

a refund, reduce the refund by the interest

less than 3, divide the amount on line 10b

Line 11d

by that number.

due.

To figure the foreign tax credit, the

For corporations, enter this interest at

Line 10e

shareholder of a section 1291 fund

the bottom right margin of Form 1120,

figures the total creditable foreign taxes

Nonexcess distribution. The

page 1, and label it as “Sec. 1291

attributable to the distribution. This

nonexcess distribution is the lesser of line

interest.” Include this amount in your

amount includes the direct foreign taxes

10a or line 10d. This amount is taxed

check or money order payable to the

paid by the shareholder on the distribution

according to the rules of section 301. To

United States Treasury. If you would

(for example, withholding taxes) and, for

the extent that section 301(c)(1) is

otherwise receive a refund, reduce the

10% or greater corporate shareholders,

applicable, include the amount as a

refund by the interest due.

any taxes deemed paid under section

dividend on your income tax return. For

902. Both the direct and indirect foreign

corporations, include this amount on

taxes must be creditable under general

Form 1120, Schedule C, line 13. For

Part V. Status of Prior Year

foreign tax credit principles and the

individuals, include this amount on Form

Section 1294 Elections and

shareholder must choose to claim the

1040, line 9a (and, if applicable, on

foreign tax credit for the current tax year.

Schedule B (Form 1040), line 5).

Termination of Section

The excess distribution taxes (the

Excess distributions. If you received

1294 Elections

creditable foreign taxes attributable to an

more than one distribution during the tax

excess distribution) are determined by

year with respect to the applicable stock,

apportioning the total creditable foreign

Each person who has made a section

the excess distribution is apportioned

taxes between the part of the distribution

1294 election must (1) annually report the

among all actual distributions. Each

that is an excess distribution and the part

status of that election and (2) report the

apportioned amount is treated as a

that is not.

termination of any section 1294 election

separate excess distribution.

that occurred during the tax year. See

The excess distribution taxes are

Line 10f

Temporary Regulations section

allocated in the same manner as the

Gain recognized on the disposition of

1.1294-1T(h).

excess distribution is allocated. See

stock of a section 1291 fund is treated as

Excess distributions on page 2. Those

Line 1. Enter the last day of each tax

an excess distribution. Losses are not

taxes allocated to pre-PFIC tax years and

year for which you made a section 1294

recognized. Stock of a section 1291 fund

the current tax year are taken into

election that is outstanding. Do not

is considered disposed of if it is sold,

account for the current tax year under the

include an election made in the current

transferred, or pledged.

general rules of the foreign tax credit.

tax year.

Line 11

Line 2. Enter the undistributed earnings

The excess distribution taxes allocated

of the QEF for which the payment of tax

to a PFIC year only reduce the increase

Lines 11a and 11b

in tax figured for that tax year (but not

was extended by the section 1294

below zero). No carryover of any unused

election entered on line 1. If the election

Determine the taxation of the excess

was partially terminated in a prior year,

excess distribution taxes is allowed.

distribution on a separate sheet and

enter the remaining undistributed

attach it to Form 8621. Divide the amount

When you dispose of PFIC stock, the

earnings.

on line 10e or 10f, whichever applies, by

above foreign tax credit rules apply only

the number of days in your holding

Line 3. Enter the tax for which payment

to the part of the gain that, without regard

period. The holding period of the stock is

was extended by the section 1294

to section 1291, would be treated under

treated as ending on the date of the

election entered on line 1. If the election

section 1248 as a dividend.

distribution or disposition.

was partially terminated in a previous tax

Line 11e

year, enter the balance of the deferred

Special rules apply to the holding

This amount is the aggregate increase in

tax.

period if:

•

tax and is included on your tax return as

The deemed dividend election (Election

Line 4. Enter the accrued interest

additional taxes.

C) is made (see the instructions for

(determined under section 6621) on the

Election C beginning on page 3) or

For individuals, enter this amount on

deferred tax. This is the interest accrued

•

Form 1040 to the left of the line 44 entry

The mark-to-market election (Election

from the due date (not including

F) is made or was made in a prior year

space. Enter “Sec. 1291” next to the

extensions) of the return for the year for

(see section 1291(a)(3)(A)(ii)).

amount and include the amount as part of

which the section 1294 election was

the total for line 44.

made until the date the current year’s

Determine the amount allocable to

return is filed.

each tax year in your holding period by

For corporations, enter this amount on

adding the amounts allocated to the days

Form 1120, Schedule J, to the left of the

Line 5. Enter the event(s) that occurred

in each such tax year. Add the amounts

entry space for line 3. Enter “Sec. 1291”

during the tax year that terminated one or

-6-

Instructions For Form 8621 Page 6

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