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in its income or in the income of another U.S.

that loss cannot be recognized. In addition,

Line 7 Attachment

person. The shareholder shows this by

there is no basis adjustment for a loss.

The shareholder must attach a statement to

including in the statement mentioned above

Form 8621-A that shows the calculation of its

the following information:

How To Make the Election

pro rata share of the post-1986 earnings and

The name, address, and identifying

profits of the Section 1297(e) PFIC that is

To make this election, check box B in Part I

number of the U.S. person and the amount

treated as distributed to the shareholder on

and complete Part II, lines 1, 2, and 4, and

that was included in income;

the CFC qualification date. The post-1986

Part IV. For more information regarding

The tax year in which the amount was

earnings and profits may be reduced (but not

making Election B, see Regulations section

previously included in income;

below zero) by the amount that the

1.1298-3(b) and Regulations section

The provision of law under which the

shareholder satisfactorily shows was

1.1298-3(e).

amount was previously included in income;

previously included in its income or in the

A description of the transaction in which

Election C. Late Deemed

income of another U.S. person. The

the shareholder acquired the stock of the

Dividend Election With Respect

shareholder shows this by including in the

former PFIC from the other U.S. person; and

statement mentioned above the following

to a Section 1297(e) PFIC

The provision of law under which the

information:

shareholder's holding period includes the

This is a deemed dividend election under

The name, address, and identifying

holding period of the other U.S. person.

section 1298(b)(1) that is made by a

number of the U.S. person and the amount

shareholder (defined earlier) with respect to

that was included in income;

For more information on making Election

a Section 1297(e) PFIC that is also a CFC

The tax year in which the amount was

A, see Regulations section 1.1298-3(c) and

after the time prescribed in Regulations

previously included in income;

Regulations section 1.1298-3(e).

section 1.1297-3(c)(4) has elapsed.

A description of the transaction in which

the shareholder acquired the stock of the

How To Make the Election

Who May Make the Election

Section 1297(e) PFIC from the other U.S.

person; and

To make this election, check box A in Part I

The election may be made by a shareholder

The provision of law under which the

and complete Part II, lines 1, 2, and 3, and

of a foreign corporation that is a Section

shareholder's holding period includes the

Part IV.

1297(e) PFIC with respect to that

holding period of the other U.S. person.

Election B. Late Deemed Sale

shareholder.

Election With Respect to a

How To Make the Election

Effect of Election

Former PFIC

To make this election, check box C in Part I

A shareholder making this election is treated

This is a deemed sale election under section

and complete Part III, lines 5, 6, and 7, and

as receiving a dividend of its pro rata share

1298(b)(1) that is made with respect to a

Part IV.

of the post-1986 earnings and profits of the

former PFIC after the time prescribed in

Section 1297(e) PFIC on the CFC

For more information on making Election

Regulations section 1.1298-3(b)(3) has

qualification date. The deemed dividend is

C, see Regulations sections 1.1297-3(c) and

elapsed.

taxed under section 1291 as an excess

(e).

distribution, allocated only to the days in the

Who May Make the Election

Election D. Late Deemed Sale

shareholder's holding period during which

the foreign corporation qualified as a PFIC.

Election With Respect to a

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

For this purpose, the shareholder's holding

that is a shareholder of a former PFIC.

Section 1297(e) PFIC

period ends on the day before the CFC

qualification date. After the deemed dividend

This is a deemed sale election under section

Effect of Election

election, the shareholder's stock is not

1298(b)(1) that is made with respect to a

treated as stock in a PFIC unless the

Section 1297(e) PFIC after the time

A shareholder making this election is

qualified portion of the shareholder's holding

prescribed in Regulations section

deemed to have sold the former PFIC stock

period ends, and the foreign corporation

1.1297-3(b)(3) has elapsed.

on the termination date for its fair market

thereafter qualifies as a PFIC.

value. The gain from the deemed sale is

taxed under section 1291 as an excess

Who May Make the Election

distribution received on the termination date.

Special Rules

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

After the deemed sale election, the

For the purpose of this election, the following

that is a shareholder of a foreign corporation

shareholder's stock is not treated as stock in

apply:

that is a section 1297(e) PFIC with respect to

a PFIC unless the foreign corporation

such shareholder.

The basis of the shareholder's stock is

thereafter qualifies as a PFIC.

increased by the amount of the deemed

dividend. The manner in which the basis

Effect of Election

Special Rules

adjustment is made depends on whether the

A shareholder making this election is

shareholder is a direct or indirect

For purposes of this election, the following

deemed to have sold the Section 1297(e)

shareholder. See Regulations section

apply.

PFIC stock on the CFC qualification date for

1.1297-3(c)(6).

The basis of the shareholder's stock is

its fair market value. The gain from the

For purposes of the PFIC rules only, the

increased by the gain recognized on the

deemed sale is taxed under section 1291 as

shareholder's new holding period begins on

deemed sale. The manner in which the basis

an excess distribution received on the CFC

the CFC qualification date.

adjustment is made depends on whether the

qualification date. After the deemed sale

The term “post-1986 earnings and profits”

shareholder is a direct or indirect

election, the shareholder's stock is not

means the undistributed earnings and profits

shareholder. See Regulations section

treated as stock in a PFIC unless the

of the PFIC (as of the day before the CFC

1.1298-3(b)(5).

qualified portion of the shareholder's holding

qualification date) accumulated in taxable

For purposes of the PFIC rules only, the

period ends, and the foreign corporation

years beginning after 1986 during which the

shareholder's new holding period of the

thereafter qualifies as a PFIC.

CFC was a PFIC and while the shareholder

stock begins on the day following the

held the stock.

termination date.

The election may be made for stock on

which the shareholder will realize a loss, but

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 3

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