Instructions For Form 8621 - 2016 (Page 11 of 14) in pdf

Line 15

stock, the excess distribution is

distribution allocated to each year (as

apportioned among all actual

determined on line 16a) by the highest

Lines 15a and 15b

distributions. Each apportioned amount

rate of tax under section 1 or section 11,

Enter your total distributions from the

is treated as a separate excess

whichever applies, in effect for that tax

section 1291 fund with respect to the

distribution.

year. Add the increases in tax computed

applicable stock for the periods

for all years. Enter the aggregate

Line 15f. Gain recognized on the

indicated.

increases in tax (before credits) on

disposition of stock of a section 1291

line 16c.

fund is treated as an excess distribution.

Note. A distribution to a corporation

The following table sets forth the

Loss realized on the disposition of stock

claiming the foreign tax credit for

highest rate of tax in effect under

of a section 1291 fund is not taken into

deemed paid foreign taxes includes

section 1 (applicable to individuals) for

account under section 1291, and thus,

foreign taxes deemed paid. See Form

calendar years 1987 through 2016.

for example, does not reduce the

1118, Foreign Tax Credits–

amount of total gain subject to section

Corporations, Schedule C, Part I,

Tax Rates

1291. However, the loss may be

column 10, and Parts II and III, column

recognized under another provision of

8, for the gross-up amount.

the Code, and reported accordingly.

Tax year(s) (based

Highest rate of tax in

Line 15a. If the holding period of the

Stock of a section 1291 fund is

on calendar year

effect under IRC

applicable stock began in the current

considered disposed of if it is sold,

taxpayer)

section 1

year, there is no excess distribution and

transferred, or pledged.

2013–2016

39.6%

Part V should be completed as follows:

Line 16

Enter on line 15a the total distributions

2003–2012

35%

you received from the section 1291 fund

Lines 16a and 16b

2002

38.6%

with respect to that stock during the

Determine the taxation of the excess

2001

39.1%

current tax year. If you did not dispose

distribution on a separate sheet and

of that stock during the tax year, do not

1993–2000

39.6%

attach it to Form 8621. Divide the

complete the rest of Part V. If you did

1991–1992

31%

amount on line 15e or 15f, whichever

dispose of that stock during the tax

applies, by the number of days in your

1988–1990

28%

year, skip lines 15b through 15e and

holding period. The holding period of

complete lines 15f and 16.

1987

38.5%

the stock is treated as ending on the

If the holding period of the applicable

date of the distribution or disposition.

Line 16d. To figure the foreign tax

stock began in the current tax year, the

credit, the shareholder of a section 1291

line 15a amount is taxed according to

Special rules apply to the holding

fund figures the total creditable foreign

the rules of section 301. To the extent

period if:

taxes attributable to the distribution.

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

The deemed dividend election

This amount includes the direct foreign

include the amount as a dividend on

(Election E) is made. See the

taxes paid by the shareholder on the

your income tax return. For

instructions earlier for Election E.

distribution (for example, withholding

corporations, include this amount on

The mark-to-market election (Election

taxes) and, for 10% or greater corporate

Form 1120, Schedule C, line 13. For

C) is made or was made in a prior year

shareholders, any taxes deemed paid

individuals, include this line 15a amount

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

under section 902. Both the direct and

on Form 1040, line 9a (and, if

The deemed dividend election with

indirect foreign taxes must be creditable

applicable, on Schedule B (Form 1040),

respect to a Section 1297(e) PFIC

under general foreign tax credit

line 5).

(Election G) or with respect to a Former

principles and the shareholder must

PFIC (Election H) is made. See the

Line 15c. Divide the amount on

choose to claim the foreign tax credit for

instructions for Election G and Election

line 15b by 3. If the number of tax years

the current tax year.

H earlier.

in your holding period preceding the

The excess distribution taxes (the

current tax year is less than 3, divide the

creditable foreign taxes attributable to

amount on line 15b by that number.

Determine the amount allocable to

an excess distribution) are determined

each tax year in your holding period by

by apportioning the total creditable

adding the amounts allocated to the

Line 15e

foreign taxes between the part of the

days in each such tax year. Add the

distribution that is an excess distribution

Nonexcess distribution. The

amounts allocated to the pre-PFIC and

and the part that is not.

nonexcess distribution is the lesser of

current tax years. Enter the sum on

The excess distribution taxes are

line 15a or line 15d. This amount is

line 16b.

allocated in the same manner as the

taxed according to the rules of section

excess distribution is allocated. See

301. To the extent that section 301(c)(1)

This amount is treated as ordinary

Excess distributions earlier. Those

is applicable, include the amount as a

income (e.g., individuals and

taxes allocated to pre-PFIC tax years

dividend on your income tax return. For

corporations should enter this amount

and the current tax year are taken into

corporations, include this amount on

on the “other income” line of their tax

account for the current tax year under

Form 1120, Schedule C, line 13. For

return).

the general rules of the foreign tax

individuals, include this amount on Form

Line 16c. Determine the increase in tax

credit.

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

for each tax year in your holding period

Schedule B (Form 1040), line 5).

The excess distribution taxes

(other than the current tax year and

allocated to a PFIC year only reduce the

Excess distributions. If you received

pre-PFIC years). An increase in tax is

increase in tax figured for that tax year

more than one distribution during the tax

determined for each PFIC year by

(but not below zero). No carryover of

year with respect to the applicable

multiplying the part of the excess

-11-

Instructions For Form 8621 - 2016 Page 11

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