Instructions For Form 8621 - 2016 (Page 6 of 14) in pdf

information, see Regulations section

For more information, see section

Annual Election Requirements of

1.1295-1(g)(2).

1296 and Regulations section 1.1296-1.

the PFIC or Intermediary

See sections 1296(f) and (g) and

B. Election To Extend Time for

PFIC Annual Information Statement.

Regulations sections 1.1296-1(e) and

Payment of Tax

For each year of the PFIC ending in a

(h)(1)(ii) for information regarding stock

taxable year of a shareholder to which

owned through certain foreign entities.

Who May Make the Election

the QEF election applies, the PFIC must

A shareholder of a QEF may make

provide the shareholders with a PFIC

When To Make the Election

Election B to extend the time for

Annual Information Statement. The

This election must be made on or before

payment of the tax on its share of the

statement must contain certain

the due date (including extensions) of

undistributed earnings of the fund for

information, including:

the U.S. person's income tax return for

the current tax year. If a U.S.

1. The shareholder's pro rata share

the tax year in which the stock is

partnership is a shareholder of a QEF,

of the PFIC's ordinary earnings and net

marked to market under section 1296. A

the election is made at the partner level.

capital gain for that taxable year, or

section 1296 election by a CFC is made

2. Sufficient information to enable

by its controlling shareholders. For more

Special Rules

the shareholder to calculate its pro rata

information, see Regulations section

If this election is made, interest will be

share of the PFIC's ordinary earnings

1.1296-1(h)(1)(ii). Once made, the

imposed on the amount of the deferred

and net capital gain for that taxable

election applies to all subsequent tax

tax. This interest must be paid on the

year.

years unless the election is revoked or

termination of the election (see the

terminated pursuant to Regulations

For other information required to be

instructions for Part VI, line 24, later).

section 1.1296-1(h)(3).

included in the PFIC Annual Information

The election cannot be made for any

Statement see Regulations section

earnings on shares disposed of during

How To Make the Election

1.1295-1(g).

the tax year or for a tax year that any

To make the election:

portion of the shareholder's pro rata

Annual Intermediary Statement. If

share of the fund's earnings is included

1. Check box C in Part II,

the shareholder holds stock in a PFIC

in income under section 951 (relating to

through an intermediary, an Annual

2. Complete either: (i) Part V to

CFCs).

Intermediary Statement may be issued

calculate the amount due under section

in lieu of the PFIC Annual Information

1291 (when required, as generally

When To Make the Election

Statement. For the definition of an

described in the next paragraph) or (ii)

intermediary, see Regulations section

Part IV to calculate the gain or loss on

Generally, this election must be made

1.1295-1(j). For details on the

the stock, in all other cases.

by the due date, including extensions, of

information that should be included in

the shareholder's tax return for the tax

the Annual Intermediary Statement, see

Coordination of Election C with sec-

year for which the shareholder reports

Regulations section 1.1295-1(g)(3).

tion 1291 for first year of election. In

the income related to the deferred tax.

general, when a shareholder makes a

Combined statements. A PFIC that

mark-to-market election for PFIC stock

owns directly or indirectly any shares of

How To Make the Election

in a year other than the first year in

stock in one or more PFICs may provide

To make this election:

which the shareholder holds stock in the

its shareholders with a PFIC Annual

PFIC and no QEF election is in effect,

1. Check box B in Part II and

Information Statement in which it

the PFIC stock is treated as sold at fair

combines its own required information

2. Complete lines 8a through 9c of

market value on the last day of the tax

and representations with the information

Part III.

year for which the election is made, and

and representations of any lower-tier

For more information on making

the gain is treated as an excess

PFIC. Similarly, an intermediary through

Election B, see Temporary Regulations

distribution subject to section 1291. In

which a shareholder indirectly holds

section 1.1294-1T.

addition, any distributions made during

stock in more than one PFIC may

the year with respect to the PFIC stock

provide the shareholder a combined

See Part VI for annual reporting

are subject to section 1291. See section

Annual Intermediary Statement. For

requirements for outstanding section

1296(j) and Regulations sections

more information, see Regulations

1294 elections.

1.1296-1(i).

section 1.1295-1(g)(4).

C. Election To Mark-to-Market

D. Deemed Sale Election in

Documentation. For all taxable years

PFIC Stock (Section 1296

Connection with a QEF Election

subject to the section 1295 election, the

Election)

shareholder must keep copies of all

Who May Make the Election

Forms 8621, attachments, and all PFIC

Who May Make the Election

This is a deemed sale election under

Annual Information Statements or

Generally, an election to mark-to-market

section 1291(d)(2)(A). This election may

Annual Intermediary Statements. Failure

PFIC stock under section 1296 may be

be made by a U.S. person that elects to

to produce these documents at the

made by:

treat a PFIC as a QEF for a foreign

request of the IRS may result in

A U.S. person who owns (or is treated

corporation's tax year following its first

invalidation or termination of the section

as owning) “marketable stock” (defined

tax year as a PFIC included in the

1295 election. See Regulations section

earlier) in a PFIC at the close of such

shareholder's holding period (an

1.1295-1(f)(2)(ii). In rare and unusual

person's tax year or

unpedigreed QEF). A shareholder

circumstances, the IRS will consider

A RIC that meets the requirements of

making this election is deemed to have

requests for alternative documentation

section 1296(e)(2).

sold the PFIC stock as of the first day of

to verify the ordinary earnings and net

the PFIC's first tax year as a QEF (the

capital gain of the PFIC. For more

-6-

Instructions For Form 8621 - 2016 Page 6

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