Instructions For Form 8621 December 2011 (Page 8 of 10) in pdf

line of their tax return. However,

same format shown on lines 8 through

through 10e and complete lines 10f and

Regulated Investment Companies, for

9c. Then:

11.

•

purposes of section 851(b), should treat

Enter “multiple” on lines 8a, 8b, and

If the holding period of the applicable

this amount as a dividend.

9a.

stock began in the current tax year, the

•

Enter your net ordinary gains on line

line 10a amount is taxed according to

If a CFC makes a mark-to-market

8c (do not enter any net losses on line

the rules of section 301. To the extent

election with respect to a PFIC in which

8c).

that section 301(c)(1) is applicable,

it owns stock, any line 5c gain is treated

•

Enter your net ordinary losses on line

include the amount as a dividend on

as foreign personal holding company

9b.

your income tax return. For

income and any line 7 loss is treated as

•

Enter your net “other” losses on line

corporations, include this amount on

a deduction that is allocable to foreign

9c.

Form 1120, Schedule C, line 13. For

personal holding company income.

For more information relating to

individuals, include this line 10a amount

Lines 8 through 9c

mark-to-market elections under section

on Form 1040, line 9a (and, if

1296, see Regulations sections

applicable, on Schedule B (Form 1040),

Complete lines 8 through 9c if you sold

1.1296-1 and 1.1296-2.

line 5).

or otherwise disposed of any section

Line 10c

1296 stock during the tax year. For

purposes of lines 8 through 9c, “section

Part IV. Distributions

Divide the amount on line 10b by 3. If

1296 stock” is any stock for which the

the number of tax years in your holding

From and Dispositions

taxpayer has made a mark-to-market

period preceding the current tax year is

election pursuant to section 1296(a),

less than 3, divide the amount on line

of Stock of a Section

which is in effect for the tax year and

10b by that number.

for which the coordination rule of

1291 Fund

Line 10e

Regulations section 1.1296-1(i) does

See Section 1291 Fund on page 2 for

not apply.

Nonexcess distribution. The

the definition of section 1291 fund. See

Line 8c. If the fair market value of the

nonexcess distribution is the lesser of

page 2 for a brief summary of the tax

line 10a or line 10d. This amount is

stock on the date of sale or disposition

consequences for shareholders of a

taxed according to the rules of section

(line 8a) is more than the U.S. person’s

section 1291 fund.

301. To the extent that section

adjusted basis in the stock on the date

Complete a separate Part IV for

of sale or disposition (line 8b), the line

301(c)(1) is applicable, include the

each excess distribution. That is, if you

8c excess is a gain and is treated as

amount as a dividend on your income

receive a distribution from a section

ordinary income. Corporations and

tax return. For corporations, include this

1291 fund with respect to shares for

individuals should include the gain on

amount on Form 1120, Schedule C,

which you have different holding

line 13. For individuals, include this

the “other income” line of their tax

periods, complete lines 10a through

amount on Form 1040, line 9a (and, if

returns. Other entities should include

10e separately for each block of shares

applicable, on Schedule B (Form 1040),

this amount on the comparable line of

that has the same holding period

line 5).

their tax return.

(“applicable stock”). If you dispose of

Excess distributions. If you received

If the adjusted basis of the stock

stock in a section 1291 fund for which

more than one distribution during the

(line 8b) exceeds its fair market value

you have different holding periods,

tax year with respect to the applicable

(line 8a), the excess is a loss and is

complete line 10f for each block of

stock, the excess distribution is

entered on line 8c as such.

shares that has the same holding

apportioned among all actual

Furthermore, the filer must complete

period.

distributions. Each apportioned amount

lines 9a and 9b, and, if applicable, line

Line 10

is treated as a separate excess

9c.

distribution.

Line 9a. Enter any unreversed

Lines 10a and 10b

Line 10f

inclusions with respect to the stock (see

Enter your total distributions from the

definition above).

Gain recognized on the disposition of

section 1291 fund with respect to the

stock of a section 1291 fund is treated

Line 9b. Enter the loss from line 8c,

applicable stock for the periods

as an excess distribution. Stock of a

but only to the extent of unreversed

indicated.

section 1291 fund is considered

inclusions on line 9a. This loss is

Note. A distribution to a corporation

disposed of if it is sold, transferred, or

treated as ordinary loss. Corporations

claiming the foreign tax credit for

pledged.

and individuals should include the loss

deemed paid foreign taxes includes

on the “other income” line of their tax

Line 11

foreign taxes deemed paid. See Form

returns. Other entities should include

1118, Foreign Tax

this amount on the comparable line of

Lines 11a and 11b

Credits – Corporations, Schedule C,

their tax return. However, Regulated

Part I, column 10, and Parts II and III,

Determine the taxation of the excess

Investment Companies, for purposes of

column 8, for the gross-up amount.

distribution on a separate sheet and

section 851(b), should treat this amount

attach it to Form 8621. Divide the

Line 10a. If the holding period of the

as a dividend.

amount on line 10e or 10f, whichever

applicable stock began in the current

Line 9c. Enter the amount by which

applies, by the number of days in your

year, there is no excess distribution and

the loss on line 8c exceeds the

holding period. The holding period of

Part IV should be completed as follows:

unreversed inclusions. This amount is

the stock is treated as ending on the

Enter on line 10a the total distributions

subject to the rules generally applicable

date of the distribution or disposition.

you received from the section 1291

to losses provided elsewhere in the

fund with respect to that stock during

Special rules apply to the holding

Code and regulations thereunder. See

the current tax year. If you did not

period if:

Regulations section 1.1296-1(c)(4)(ii).

•

dispose of that stock during the tax

The deemed dividend election

Multiple dispositions. In the case of

year, do not complete the rest of Part

(Election C) is made. See the

multiple dispositions, attach a

IV. If you did dispose of that stock

instructions for Election C beginning on

statement for each disposition using the

during the tax year, skip lines 10b

page 4.

-8-

Instructions For Form 8621 December 2011 Page 8

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