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income tax return for the tax year to which an

Special Rules

Add the amounts allocated to the tax

years before the foreign corporation became

increase in tax is attributable and ending with

For purposes of this election, the following

the due date (without regard to extensions)

a PFIC (pre-PFIC years) and amounts

apply.

of your income tax return for the election

allocated to the election year. Enter the sum

The basis of the shareholder's stock is

year.

on line 10.

increased by the gain recognized on the

With respect to the amounts allocated to

Lines 18 and 19

deemed sale. The manner in which the basis

each tax year in your holding period other

adjustment is made depends on whether the

The line 18 subtotal represents all amounts

than the election year and the pre-PFIC

shareholder is a direct or indirect

due as of the due date (without regard to

years, see the instructions for line 14.

shareholder. See Regulations section

extensions) of the shareholder's income tax

1.1297-3(b)(5).

return for the election year. The shareholder

Lines 11 and 12

For purposes of the PFIC rules only, the

making the late deemed dividend or late

shareholder's new holding period begins on

The shareholder's income tax liability is

deemed sale election must pay additional

the CFC qualification date.

generally the amount shown on the “total tax”

interest on the amount on line 18 from the

line of the return.

The election may be made for stock on

due date (without regard to extensions) of its

which the shareholder will realize a loss, but

income tax return for the election year up to

Line 14

that loss cannot be recognized. In addition,

and including the date the Form 8621-A and

Determine the increase in tax for each tax

there is no basis adjustment for a loss.

payment are filed with the IRS. Include this

year in your holding period other than the

interest amount on line 19.

election year and pre-PFIC years (i.e., for

How To Make the Election

each PFIC year). An increase in tax is

Closing Agreement

To make this election, check box D in Part I

determined for each PFIC year by multiplying

If the election year is a closed taxable year,

and complete Part III, lines 5, 6, and 8, and

the part of the distribution or disposition

file the closing agreement on page 3 of the

Part IV.

allocated to each year (see Lines 9b and 10,

form in duplicate. Both copies must contain

earlier) by the highest rate of tax under

original signatures. Photocopies of

For more information on making Election

section 1 or section 11, whichever applies, in

signatures are not acceptable. The closing

D, see Regulations sections 1.1297-3(b) and

effect for that tax year. Add the increases in

agreement on page 3 of the actual form you

(e).

tax computed for all PFIC years. Enter the

file is the IRS copy. The photocopy of the

aggregate increases in tax (before credits)

closing agreement that you attach to the

on line 14.

Part IV. Computation of

4-page form is the taxpayer copy. Write

Line 15

Tax and Interest Due

“Taxpayer Copy” in the upper margin of this

copy. File the taxpayer copy as the first

To figure the foreign tax credit, figure the

Line 9a

attachment after the 4-page form. The

total creditable foreign taxes attributable to

taxpayer copy will be returned to you after an

the excess distribution (line 9a) amount. This

Enter the amount treated as an excess

authorized IRS official has signed it.

amount includes, for 10% or greater

distribution under the deemed dividend or

corporate shareholders, any taxes deemed

Identifying number. Individuals should

deemed sale election. This amount is:

paid under section 902. Both the direct and

enter a social security number or a taxpayer

In the case of a former PFIC making a

indirect foreign taxes must be creditable

identification number issued by the IRS. All

deemed dividend election, the amount on

under general foreign tax credit principles

other entities must enter an employer

line 3 of Part II.

and the shareholder must choose to claim

identification number.

In the case of a former PFIC making a

the foreign tax credit.

deemed sale election, the amount on line 4

Balance Sheet

of Part II.

The excess distribution taxes (the

In the case of a Section 1297(e) PFIC

creditable foreign taxes attributable to an

If the shareholder is making a late deemed

making a deemed dividend, the amount on

excess distribution) are allocated in the

sale election with respect to a former PFIC or

line 7 of Part III.

same manner as the excess distribution is

a Section 1297(e) PFIC (Election B or D) the

In the case of a Section 1297(e) PFIC

allocated. See the instructions for Lines 9b

shareholder is required to complete the

making a deemed sale election, the amount

and 10 and Line 14, earlier. Those taxes

balance sheet on page 4 of Form 8621-A.

on line 8 of Part III.

allocated to pre-PFIC tax years and the

election year are taken into account for the

Note. If the PFIC uses the U.S. dollar

Lines 9b and 10

election year under the general rules of the

approximate separate transactions method

Determine the allocation of the excess

foreign tax credit.

of accounting (DASTM), the balance sheet

distribution to all applicable taxable years on

should be prepared and translated into U.S.

The excess distribution taxes allocated to

a separate sheet and attach it to Form

dollars according to Regulations section

a PFIC year only reduce the increase in tax

8621-A. Divide the amount on line 9a by the

1.985-3(d), rather than U.S. GAAP.

figured for that tax year (but not below zero).

number of days in your holding period. The

No carryover of any unused excess

holding period of the stock is treated as

Line 11

distribution taxes is allowed.

ending on:

The termination date, in the case of a

You must attach to Form 8621-A a written

When you dispose of PFIC stock, the

former PFIC making a deemed sale or

narrative for each intangible asset describing

above foreign tax credit rules apply only to

deemed dividend election;

how the asset valuation was determined.

the part of the gain that, without regard to

This narrative must include all pertinent

The CFC qualification date, in the case of

section 1291, would be treated under section

a Section 1297(e) PFIC making a deemed

valuation information including whether the

1248 as a dividend.

sale election; and

valuation was done by a third party. If the

Line 16

valuation was done by a third party, include

The day before the CFC qualification date,

the name and business address of that third

in the case of a Section 1297(e) PFIC

This amount is the aggregate increases in

party in the narrative.

making a deemed dividend election.

taxes on the excess distribution within the

meaning of section 1291(c)(2).

Determine the amount allocable to each

Disclosure, Privacy Act, and Paperwork

tax year in your holding period by adding the

Line 17

Reduction Act Notice. We ask for the

amounts allocated to the days in each such

information on this form to carry out the

Compute the interest on each net increase in

tax year. Then:

Internal Revenue laws of the United States.

tax for the period beginning on the due date

Sections 6001, 6011, 6012(a), 6103, and

(without regard to extensions) of your

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 4

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