Instructions For Form 8621 - 2016 (Page 10 of 14) in pdf

amounts allowed as a deduction under

on the “other income” line of their tax

Line 9b. Calculate your total tax as if

the section 1296 mark-to-market rules

returns. Other entities should include

your total taxable income did not include

for prior tax years. See section 1296(d)

this amount on the comparable line of

your share of the undistributed earnings

and Regulations section 1.1296-1(a)(3).

their tax return.

of the QEF (line 8e). Enter this amount

on line 9b.

Lines 10c and 12. Corporations and

Line 14c. Enter the amount by which

individuals should include the gain or

the loss on line 13c exceeds the

Line 9c. For corporations, enter this

(loss) on the “other income” line of their

unreversed inclusions. This amount is

deferred tax on Form 1120, Schedule J,

tax returns. Other entities should include

subject to the rules generally applicable

in brackets to the left of the entry space

this amount on the comparable line of

to losses provided elsewhere in the

for line 11. Subtract this deferred tax

their tax return. However, Regulated

Code and regulations thereunder. See

amount from the total of lines 7, 8, and

Investment Companies, for purposes of

Regulations section 1.1296-1(c)(4)(ii).

10, and enter the difference on line 11.

section 851(b), should treat amounts

Multiple dispositions. In the case of

For individuals, enter this deferred

included in income as a dividend.

multiple dispositions, attach a statement

tax on Form 1040 in brackets to the left

If a CFC makes a section 1296

for each disposition using the same

of the entry space for line 63. Subtract

mark-to-market election with respect to

format shown on lines 13 through 14c.

this deferred tax amount from the total

a PFIC in which it owns stock, any

Then:

of lines 56 through 62, and enter the

line 10c gain is treated as foreign

Enter “multiple” on lines 13a, 13b,

difference on line 63.

personal holding company income and

and 14a.

any line 12 loss is treated as a

Enter your net ordinary gains on

Part IV. Gain or (Loss)

deduction that is allocable to foreign

line 13c (do not enter any net losses on

From a Section 1296

personal holding company income.

line 13c).

Enter your net ordinary losses on

Mark-to-Market Election

Lines 13 through 14c

line 14b.

A shareholder that has made a

Complete lines 13 through 14c if you

Enter your net “other” losses on

mark-to-market election under section

sold or otherwise disposed of any

line 14c.

1296 with respect to PFIC stock

section 1296 stock during the tax year.

For more information relating to

completes lines 10a through 12 with

For purposes of lines 13 through 14c,

mark-to-market elections under section

respect to PFIC stock that the

“section 1296 stock” is any stock for

1296, see Regulations sections

shareholder holds at the close of its

which the taxpayer has made a

1.1296-1 and 1.1296-2.

taxable year, and lines 13a through 14c

mark-to-market election pursuant to

with respect to PFIC stock that it sold or

section 1296(a), which is in effect for the

disposed of during its taxable year.

tax year and for which the coordination

Part V. Distributions From

rule of Regulations section 1.1296-1(i)

As discussed earlier in Mark-to-

and Dispositions of Stock

does not apply.

Market Election, a shareholder may be

of a Section 1291 Fund

required to complete Part V, rather than

Line 13c. If the fair market value of the

Part IV, in the first year in which a mark-

See Section 1291 Fund earlier for the

stock on the date of sale or disposition

to-market election is made. See section

definition of section 1291 fund, and also

(line 13a) is more than the U.S. person's

1296(j) and Regulations sections

for a brief summary of the tax

adjusted basis in the stock on the date

1.1291-1(c)(4) and 1.1296-1(i).

consequences for shareholders of a

of sale or disposition (line 13b), the

section 1291 fund.

line 13c excess is a gain and is treated

Lines 10a Through 12

as ordinary income. Corporations and

Also, see Section 1291 Fund and

If the fair market value of the PFIC stock

individuals should include the gain on

Mark-to-Market Election earlier for a

as of the close of the tax year is more

the “other income” line of their tax

brief discussion of when a shareholder

than the U.S. person's adjusted basis in

returns. Other entities should include

may be subject to section 1291 in the

the stock, the excess is treated as

this amount on the comparable line of

year that it makes a mark-to-market

ordinary income.

their tax return. However, Regulated

election under any provision of the

Investment Companies, for purposes of

If the adjusted basis of the stock is

Code, including section 1296.

section 851(b), should treat this amount

more than the fair market value as of the

as a dividend.

Complete a separate Part V for each

close of the taxable year, the excess is

excess distribution. That is, if you

allowed as a deduction, but only to the

If the adjusted basis of the stock

receive a distribution from a section

extent of the lesser of:

(line 13b) exceeds its fair market value

1291 fund with respect to shares for

(line 13a), the excess is a loss and is

1. The amount of the excess

which you have different holding

entered on line 13c as such.

(line 10c) or

periods, complete lines 15a through 15e

Furthermore, the filer must complete

2. The unreversed inclusions

separately for each block of shares that

lines 14a and 14b, and, if applicable,

(defined below) with respect to such

has the same holding period

line 14c.

stock (line 11).

(“applicable stock”). If you dispose of

Line 14a. Enter any unreversed

stock in a section 1291 fund for which

This amount is treated as an ordinary

inclusions with respect to the stock (see

you have different holding periods,

loss, and as a deduction allowable in

definition earlier).

complete line 15f for each block of

computing adjusted gross income.

shares that has the same holding

Line 14b. Enter the loss from line 13c,

Unreversed inclusions. Unreversed

period.

but only to the extent of unreversed

inclusions are the excess of the

inclusions on line 14a. This loss is

amounts that were included in income

treated as ordinary loss. Corporations

under the section 1296 mark-to-market

and individuals should include the loss

rules for prior tax years over the

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Instructions For Form 8621 - 2016 Page 10

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