Instructions For Form 8621 - 2016 (Page 8 of 14) in pdf

Election F.

qualification date. After the deemed

which the CFC qualification date falls

Solely for purposes of applying the

dividend election, the shareholder’s

(i.e., the election year).

PFIC rules, the new holding period of

stock is not treated as stock in a PFIC.

The shareholder’s pro rata share of

the stock begins on the date after the

the post-1986 earning and profits of the

For purposes of this election, the

termination date or on the qualification

Section 1297(e) PFIC that is treated as

following rules apply:

date, as applicable.

distributed to the shareholder on the

The basis of the shareholder’s stock

Election F may be made for stock on

CFC qualification date, including a

is increased by the amount of the

which there would be a loss, but the loss

schedule that shows the calculation of

deemed dividend. The manner in which

is not recognized.

this amount as required under

the basis adjustment is made depends

Regulations section 1.1297-3(c)(5)(ii).

For more information on making this

on whether the shareholder is a direct or

In addition, if the shareholder filed a

election, see Regulations sections

indirect shareholder (as defined below).

Form 5471 for the Section 1297(e) PFIC

1.1297-3(b) (1297(c) PFIC), and

See Regulations section 1.1297-3(c)(6).

for the election year, attach Schedule J

1.1298-3(b) (former PFIC).

Solely for purposes of applying the

(Form 5471).

PFIC rules, the shareholder’s new

The name, address, and identifying

When To Make the Election

holding period begins on the CFC

number of the U.S. person and the

This election must be made by the due

qualification date.

amount that was included in income.

date of the shareholder’s original tax

The tax year in which the amount was

return (or by filing an amended return

When To Make the Election

previously included in income.

within 3 years of the due date, as

A description of the transaction in

This election must be made by the due

extended under section 6081, of the

which the shareholder acquired the

date of the shareholder’s original return

original return) for the tax year that

stock of the Section 1297(e) PFIC from

(or by filing an amended return within 3

includes, as appropriate, either the

the other U.S. person.

years of the due date, as extended

termination date or qualification date.

The provision of law under which the

under section 6081, of the original

However see Form 8621-A (and

shareholder's holding period includes

return) for the tax year that includes the

Regulations sections 1.1297-3(e) and

the holding period of the other U.S.

first day on which the qualified portion of

1.1298-3(e)) if the 3-year period has

person.

the shareholder’s holding period in the

expired.

PFIC begins, as determined under

For more information on making

section 1297(d). However see Form

Election G, see Regulations section

How To Make the Election

8621-A (and Regulations section

1.1297-3(c).

To make this election:

1.1297-3(e)) if the 3-year period has

H. Deemed Dividend Election

expired.

1. Check box F in Part II and

With Respect To a Former PFIC

2. Enter the gain or loss on line 15f

How To Make the Election

of Part V. If a gain, complete the rest of

Who May Make the Election

Part V.

To make this election, check box G in

This is a deemed dividend election

Part II and complete Part V, line 16. Also

under section 1298(b)(1) and

G. Deemed Dividend Election

attach to Form 8621 the information

Regulations section 1.1298-3(c). This

With Respect To a “Section

specified below.

election may be made by a shareholder

1297(e) PFIC”

of a foreign corporation that no longer

Attachments

Who May Make the Election

qualifies as a PFIC under either the

income or asset test of section 1297(a)

The shareholder must attach a

This is a deemed dividend election

if the foreign corporation was a CFC

statement to Form 8621 that shows the

under section 1298(b)(1) and

during its last taxable year as a PFIC.

calculation of its pro rata share of the

Regulations section 1.1297-3(c). This

post-1986 earnings and profits of the

election may be made by a shareholder

section 1297(e) PFIC (as defined in

Special Rules

that is a U.S. shareholder (as defined in

Regulations section 1.1291-9(j)(2)(v))

section 951(b)) of a foreign corporation

A shareholder making this election is

that is treated as distributed to the

that is a CFC and a PFIC, but that is not

treated as receiving a dividend of its pro

shareholder on the CFC qualification

treated as a PFIC with respect to the

rata share of the post-1986 earnings

date. The post-1986 earnings and

U.S. shareholder under section 1297(d).

and profits (defined below) of the former

profits may be reduced (but not below

PFIC on the termination date (defined

zero) by the amount that the

below). The deemed dividend is taxed

Special Rules

shareholder satisfactorily shows was

under section 1291 as an excess

A shareholder making this election is

previously included in its income or in

distribution, allocated only to the days in

treated as receiving a dividend of its pro

the income of another U.S. person. The

the shareholder’s holding period during

rata share of the post-1986 earnings

shareholder shows this by including in

which the foreign corporation qualified

and profits (defined later) of the Section

the statement mentioned above the

as a PFIC. For this purpose, the

1297(e) PFIC on the CFC qualification

following information:

shareholder’s holding period ends on

date (defined later). The deemed

the termination date. After the deemed

The CFC qualification date, as

dividend is taxed under section 1291 as

dividend election, the shareholder’s

defined in Regulations section

an excess distribution, allocated only to

stock is not treated as stock in a PFIC.

1.1297-3(d), for the Section 1297(e)

the days in the shareholder’s holding

period during which the foreign

PFIC.

For purposes of this election, the

corporation qualified as a PFIC. For this

The beginning and ending dates of

following rules apply:

purpose, the shareholder’s holding

the taxable year of the shareholder in

period ends on the day before the CFC

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Instructions For Form 8621 - 2016 Page 8

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