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shareholder's holding period in the foreign

are held for the production of passive

Part I. Elections

corporation begins, as determined under

income.

section 1297(d) (CFC overlap rule), and

Election A. Late Deemed

Basis for measuring assets. When

2. The stock of the foreign corporation

Dividend Election With Respect

determining PFIC status using the asset test,

held by the shareholder is treated as stock of

a foreign corporation may use adjusted basis

to a Former PFIC

a PFIC, under section 1298(b)(1), because,

if:

at any time during the shareholder's holding

This is a deemed dividend election under

1. The corporation is not publicly traded

period of the stock, other than the qualified

section 1298(b)(1) that is made with respect

for the taxable year and

portion, the corporation was a PFIC that was

to a former PFIC after the time prescribed in

not a QEF.

2. The corporation (a) is a CFC or (b)

Regulations section 1.1298-3(c)(4) has

makes an election to use adjusted basis.

Election Year

elapsed.

Publicly traded corporations must use fair

In the case of a former PFIC, the election

market value when determining PFIC status

Who May Make the Election

year is the taxable year of the electing

using the asset test.

shareholder that includes the termination

This election may be made by a U.S. person

date.

that is a shareholder of a foreign corporation

Look-thru rule. When determining if a

In the case of a Section 1297(e) PFIC, the

that is a former PFIC with respect to such

foreign corporation that owns at least 25%

election year is the taxable year of the

shareholder provided the foreign corporation

(by value) of another corporation is a PFIC,

electing shareholder that includes the CFC

was a CFC during the last taxable year as a

the foreign corporation is treated as if it held

qualification date.

PFIC.

a proportionate share of the assets and

received directly its proportionate share of

Former PFIC

the income of the 25%-or-more owned

Effect of Election

A foreign corporation is a former PFIC with

corporation.

respect to the shareholder if the corporation

A shareholder making this election is treated

Qualified Electing Fund (QEF)

satisfies neither the income test nor the asset

as receiving a dividend of its pro rata share

test (described under the definition of PFIC

of the post-1986 earnings and profits of the

A PFIC is a QEF if the U.S. person who is a

below), but whose stock, held by that

former PFIC on the termination date. The

direct or indirect shareholder of the PFIC

shareholder, is treated as stock of a PFIC,

deemed dividend is taxed under section

elects (under section 1295) to treat the PFIC

under section 1297(b)(1), because at any

1291 as an excess distribution, allocated

as a QEF. See the instructions for Form 8621

time during the shareholder's holding period

only to the days in the shareholder's holding

for more information.

of the stock the corporation was a PFIC

period during which the foreign corporation

Shareholder

(under the income or asset test of section

qualified as a PFIC. For this purpose, the

1297(a) described below) that was not a

shareholder's holding period ends on the

A shareholder is a U.S. person that is a

qualified electing fund (QEF), and the

termination date. After the deemed dividend

direct or indirect shareholder of the foreign

shareholder has not made a mark-to-market

election, the shareholder's stock is not

corporation. See Indirect shareholder,

election with respect to the PFIC.

treated as stock in a PFIC unless the foreign

earlier, for definition.

corporation thereafter qualifies as a PFIC.

Indirect shareholder

Termination date

Generally, a U.S. person is an indirect

The termination date is the last day of the

Special Rules

shareholder of a Section 1297(e) PFIC or a

last taxable year of the foreign corporation

For purposes of this election, the following

former PFIC if it is:

during which it qualified as a PFIC under

apply.

section 1297(a).

1. A direct or indirect owner of a

The basis of the shareholder's stock is

pass-through entity that is a direct or indirect

increased by the amount of the deemed

shareholder of a Section 1297(e) PFIC or a

Specific Instructions

dividend. The manner in which the basis

former PFIC,

adjustment is made depends on whether the

2. A shareholder of a PFIC that is a

Address and Identifying

shareholder is a direct or indirect

shareholder of a Section 1297(e) PFIC, or a

shareholder. See Regulations section

Number

former PFIC,

1.1298-3(c)(6).

3. A 50%-or-more shareholder of a

For purposes of the PFIC rules only, the

Address. Include the suite, room, or other

foreign corporation that is not a PFIC and

shareholder's new holding period begins on

unit number after the street address. If the

that directly or indirectly owns stock of a

the day following the termination date.

Post Office does not deliver mail to the street

Section 1297(e) PFIC or a former PFIC, or

The term “post-1986 earnings and profits”

address and the shareholder has a P.O. box,

means the undistributed earnings and profits

4. A 50%-or-more shareholder of a

enter the box number instead.

of the PFIC (as of the close of the taxable

domestic corporation that owns a section

Identifying number. Individuals should

year that includes the termination date

1291 fund.

enter a social security number or a taxpayer

without reduction for dividends distributed

Passive Foreign Investment

identification number issued by the IRS. All

during the taxable year) accumulated in tax

other entities must enter an employer

years beginning after 1986 during which the

Company (PFIC)

identification number.

CFC was a PFIC and while the shareholder

A foreign corporation is a PFIC if it meets

held the stock.

Shareholder Contact Information. If the

either the income or asset test described

person to contact with respect to Form

below.

Line 3 Attachment

8621-A is the taxpayer, enter “Same” in the

1. Income test. 75% or more of the

entry space for the name. If the person to

The shareholder must attach a statement to

corporation's gross income for its taxable

contact with respect to Form 8621-A is a

Form 8621-A that shows the calculation of its

year is passive income (as defined in section

person other than the taxpayer, enter the

pro rata share of the post-1986 earnings and

1297(b)).

information requested and attach Form

profits of the former PFIC that is treated as

2. Asset test. At least 50% of the

2848.

distributed to the shareholder on the

average percentage of assets (determined

termination date. The post-1986 earnings

under section 1297(e)) held by the foreign

and profits may be reduced (but not below

corporation during the taxable year are

zero) by the amount that the shareholder

assets that produce passive income or that

satisfactorily shows was previously included

Instructions for Form 8621-A (Rev. 10-2015)

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Instructions For Form 8621-A - Return By A Shareholder Making Certain Late Elections To End Treatment As A Passive Foreign Investment Company Page 2

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