Instructions for IRS Form 8621 "Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund"

This document contains official instructions for IRS Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund - a tax form released and collected by the Internal Revenue Service (IRS), a subdivision of the U.S. Department of the Treasury. An up-to-date fillable IRS Form 8621 is available for download through this link.

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Instructions for Form 8621
Department of the Treasury
Internal Revenue Service
(Rev. December 2020)
(Use with the December 2018 revision of Form 8621.)
Information Return by a Shareholder of a Passive Foreign Investment Company or
Qualified Electing Fund
Section references are to the Internal Revenue
General Instructions
(that is, Part I), as well as to report
Code unless otherwise noted.
information in Parts III through VI of the
form and to make elections in Part II of
Future Developments
Who Must File
the form. For example, a U.S. person
For the latest information about
that has made a section 1296
Qualifying Insurance
developments relating to Form 8621,
mark-to-market election with respect to
Corporation
and its instructions, such as legislation
a PFIC will file a single Form 8621 and
enacted after they were published, go to
A U.S. person that owns stock of a
complete Part I and Part IV.
IRS.gov/Form8621.
foreign corporation and elects to treat
Indirect shareholder. Generally, a
such stock as the stock of a qualifying
U.S. person is an indirect shareholder of
What’s New
insurance corporation under the
a PFIC if it is:
alternative facts and circumstances test
With respect to the recently added
A 50%-or-more shareholder of a
within the meaning of section 1297(f)(2)
checkbox for Qualifying Insurance
foreign corporation that is not a PFIC
must file a limited-information Form
Corporations (see the
Reminders
and that directly or indirectly owns stock
8621. For details, see
Election To Be
section below for details), the
of a PFIC,
Treated as a Qualifying Insurance
attachment requirement has been
A shareholder of a PFIC where the
Corporation, later.
clarified in the instructions for that
PFIC itself is a shareholder of another
election. See item number 3 under
How
Passive Foreign Investment
PFIC,
to make the election
under the
A 50%-or-more shareholder of a
Corporation (PFIC)
instructions for
Election To Be Treated
domestic corporation where the
Generally, a U.S. person that is a direct
as a Qualifying Insurance
Corporation.
domestic corporation owns a section
or indirect shareholder of a PFIC must
1291 fund, or
With respect to certain amounts on
file Form 8621 for each tax year under
A direct or indirect owner of a
Form 8621 that are reported on income
the following five circumstances if the
pass-through entity where the
tax returns, some of the references to
U.S. person:
pass-through entity itself is a direct or
Form 1040 (on pages 10 through 13 of
1. Receives certain direct or indirect
indirect shareholder of a PFIC.
these instructions) have been updated
distributions from a PFIC,
to reflect further redesign of Form 1040
For more information on determining
2. Recognizes gain on a direct or
for tax year 2020.
whether a U.S. person is an indirect
indirect disposition of PFIC stock,
shareholder, see Regulations section
The line 16f instructions were
1.1291-1(b)(8).
3. Is reporting information with
modified to update the Revenue Ruling
respect to a Qualified Electing Fund
For purposes of these rules, a
for the rates for interest determined
(QEF) or section 1296 mark-to-market
pass-through entity is a partnership, S
under section 6621.
election,
corporation, trust, or estate.
Reminders
4. Is making an election reportable
However, a U.S. person that owns
in Part II of the form, or
stock of a PFIC through a tax-exempt
Election to be treated as a Qualifying
organization or account described in the
5. Is required to file an annual report
Insurance Corporation. A checkbox
list below is not treated as a shareholder
pursuant to section 1298(f). See the
was added on page 1 of Form 8621 for
of the PFIC.
Part I
instructions, later, for more
shareholders of stock of a foreign
An organization or an account that is
information regarding the person that
corporation that elect to treat such stock
exempt from tax under section 501(a)
must file pursuant to section 1298(f).
as the stock of a qualifying insurance
because it is described in section
corporation under section 1297(f)(2),
A separate Form 8621 must be filed
501(c), 501(d), or 401(a).
which was added by section 14501 of
for each PFIC in which stock is held
A state college or university
the Tax Cuts and Jobs Act (TCJA). For
directly or indirectly. In the case of a
described in section 511(a)(2)(B).
more information, see
Election To Be
chain of ownership, under the five
A plan described in section 403(b) or
Treated as a Qualifying Insurance
circumstances described above, unless
457(b).
Corporation, later.
otherwise provided, if the shareholder
An individual retirement plan or
owns one PFIC and through that PFIC
annuity as defined in section 7701(a)
owns one or more other PFICs, the
(37).
shareholder must file a Form 8621 for
A qualified tuition program described
each PFIC in the chain.
in section 529 or 530.
A qualified ABLE program described
A single Form 8621 may be filed
in section 529A.
with respect to a PFIC to report the
information required by section 1298(f)
Oct 21, 2020
Cat. No. 10784P
Instructions for Form 8621
Department of the Treasury
Internal Revenue Service
(Rev. December 2020)
(Use with the December 2018 revision of Form 8621.)
Information Return by a Shareholder of a Passive Foreign Investment Company or
Qualified Electing Fund
Section references are to the Internal Revenue
General Instructions
(that is, Part I), as well as to report
Code unless otherwise noted.
information in Parts III through VI of the
form and to make elections in Part II of
Future Developments
Who Must File
the form. For example, a U.S. person
For the latest information about
that has made a section 1296
Qualifying Insurance
developments relating to Form 8621,
mark-to-market election with respect to
Corporation
and its instructions, such as legislation
a PFIC will file a single Form 8621 and
enacted after they were published, go to
A U.S. person that owns stock of a
complete Part I and Part IV.
IRS.gov/Form8621.
foreign corporation and elects to treat
Indirect shareholder. Generally, a
such stock as the stock of a qualifying
U.S. person is an indirect shareholder of
What’s New
insurance corporation under the
a PFIC if it is:
alternative facts and circumstances test
With respect to the recently added
A 50%-or-more shareholder of a
within the meaning of section 1297(f)(2)
checkbox for Qualifying Insurance
foreign corporation that is not a PFIC
must file a limited-information Form
Corporations (see the
Reminders
and that directly or indirectly owns stock
8621. For details, see
Election To Be
section below for details), the
of a PFIC,
Treated as a Qualifying Insurance
attachment requirement has been
A shareholder of a PFIC where the
Corporation, later.
clarified in the instructions for that
PFIC itself is a shareholder of another
election. See item number 3 under
How
Passive Foreign Investment
PFIC,
to make the election
under the
A 50%-or-more shareholder of a
Corporation (PFIC)
instructions for
Election To Be Treated
domestic corporation where the
Generally, a U.S. person that is a direct
as a Qualifying Insurance
Corporation.
domestic corporation owns a section
or indirect shareholder of a PFIC must
1291 fund, or
With respect to certain amounts on
file Form 8621 for each tax year under
A direct or indirect owner of a
Form 8621 that are reported on income
the following five circumstances if the
pass-through entity where the
tax returns, some of the references to
U.S. person:
pass-through entity itself is a direct or
Form 1040 (on pages 10 through 13 of
1. Receives certain direct or indirect
indirect shareholder of a PFIC.
these instructions) have been updated
distributions from a PFIC,
to reflect further redesign of Form 1040
For more information on determining
2. Recognizes gain on a direct or
for tax year 2020.
whether a U.S. person is an indirect
indirect disposition of PFIC stock,
shareholder, see Regulations section
The line 16f instructions were
1.1291-1(b)(8).
3. Is reporting information with
modified to update the Revenue Ruling
respect to a Qualified Electing Fund
For purposes of these rules, a
for the rates for interest determined
(QEF) or section 1296 mark-to-market
pass-through entity is a partnership, S
under section 6621.
election,
corporation, trust, or estate.
Reminders
4. Is making an election reportable
However, a U.S. person that owns
in Part II of the form, or
stock of a PFIC through a tax-exempt
Election to be treated as a Qualifying
organization or account described in the
5. Is required to file an annual report
Insurance Corporation. A checkbox
list below is not treated as a shareholder
pursuant to section 1298(f). See the
was added on page 1 of Form 8621 for
of the PFIC.
Part I
instructions, later, for more
shareholders of stock of a foreign
An organization or an account that is
information regarding the person that
corporation that elect to treat such stock
exempt from tax under section 501(a)
must file pursuant to section 1298(f).
as the stock of a qualifying insurance
because it is described in section
corporation under section 1297(f)(2),
A separate Form 8621 must be filed
501(c), 501(d), or 401(a).
which was added by section 14501 of
for each PFIC in which stock is held
A state college or university
the Tax Cuts and Jobs Act (TCJA). For
directly or indirectly. In the case of a
described in section 511(a)(2)(B).
more information, see
Election To Be
chain of ownership, under the five
A plan described in section 403(b) or
Treated as a Qualifying Insurance
circumstances described above, unless
457(b).
Corporation, later.
otherwise provided, if the shareholder
An individual retirement plan or
owns one PFIC and through that PFIC
annuity as defined in section 7701(a)
owns one or more other PFICs, the
(37).
shareholder must file a Form 8621 for
A qualified tuition program described
each PFIC in the chain.
in section 529 or 530.
A qualified ABLE program described
A single Form 8621 may be filed
in section 529A.
with respect to a PFIC to report the
information required by section 1298(f)
Oct 21, 2020
Cat. No. 10784P
1. The corporation is not publicly
D) or deemed dividend election
Interest holder of pass-through enti-
traded for the tax year and
(Election E) (if eligible). If the
ties. In general, the following interest
shareholder properly makes a deemed
holders must file Form 8621, unless an
2. The corporation (a) is a controlled
sale election or deemed dividend
exception applies.
foreign corporation within the meaning
election in connection with its QEF
of section 957 (CFC), or (b) makes an
1. A U.S. person that is an interest
election, then the PFIC will become a
election to use adjusted basis.
holder of a foreign pass-through entity
pedigreed QEF (as defined in
that is a direct or indirect shareholder of
Publicly traded corporations must
Regulations section 1.1291-9(j)(2)(ii))
a PFIC.
use fair market value when determining
with respect to the shareholder.
2. A U.S. person that is considered
PFIC status using the asset test.
(under sections 671 through 679) the
Note. A shareholder that receives a
Look-thru rule. When determining if a
shareholder of PFIC stock held in trust.
distribution from an unpedigreed QEF
foreign corporation is a PFIC, the
(defined in Regulations section
3. A U.S. partnership, S corporation,
foreign corporation is treated as if it
1.1291-9(j)(2)(iii)) is also subject to the
U.S. trust (other than a trust that is
directly held its proportionate share of
rules applicable to a
shareholder of a
subject to sections 671 through 679 for
the assets and directly received its
section 1291 fund
(see below).
the PFIC stock), or U.S. estate that is a
proportionate share of the income of
direct or indirect shareholder of a PFIC.
any corporation in which it owns at least
Basis adjustments. A shareholder's
25% of the stock (by value).
basis in the stock of a QEF, or in any
Note. U.S. persons that are interest
property through which the shareholder
CFC overlap rule. A 10% or more U.S.
holders of pass-through entities
is treated as owning stock of a QEF, is
shareholder (defined in section 951(b))
described in 3 above must file Form
increased by the earnings included in
that includes in income its pro rata share
8621 if the pass-through entity fails to
gross income and decreased by a
of subpart F income for stock of a CFC
file such form or the U.S. person is
distribution from the QEF to the extent
that is also a PFIC generally will not be
required to recognize any income under
of previously taxed amounts.
subject to the PFIC provisions for the
section 1291.
Section 1291 Fund
same stock during the qualified portion
When and Where To File
of the shareholder's holding period of
A PFIC is a section 1291 fund if:
the stock in the PFIC. This exception
Attach Form 8621 to the shareholder's
1. The shareholder did not elect to
does not apply to option holders. For
tax return (or, if applicable, partnership
treat the PFIC as a QEF or make a
more information, see section 1297(d).
or exempt organization return) and file
mark-to-market election with respect to
both by the due date, including
the PFIC, or
Note. The attribution rules of section
extensions, of the return at the Internal
1298(a)(2)(B) will continue to apply
2. The PFIC is an unpedigreed QEF
Revenue Service Center where the tax
even if the foreign corporation is not
(as defined in Regulations section
return is required to be filed.
treated as a PFIC with respect to the
1.1291-9(j)(2)(iii)).
shareholder under section 1297(d).
If you are not required to file an
income tax return or other return for the
Tax Consequences for
Qualified Electing Fund (QEF)
tax year, file Form 8621 directly with the
Shareholders of a Section 1291
Election
Internal Revenue Service Center,
Fund
A PFIC is a QEF if a U.S. person who is
Ogden, UT 84201-0201.
a direct or indirect shareholder of the
Shareholders of a section 1291 fund are
Definitions and Special
PFIC elects (under section 1295(b)) to
subject to special rules when they
treat the PFIC as a QEF and complies
Rules
receive an
excess distribution
(defined
with the requirements described in
below) from, or recognize gain on the
Passive Foreign Investment
section 1295(a)(2). See the instructions
sale or disposition of the stock of, a
for
Election
A, later, for information on
section 1291 fund. A distribution may be
Company (PFIC)
making this election.
partly or wholly an excess distribution.
A foreign corporation is a PFIC if it
The entire amount of gain from the
meets either the income or asset test
disposition of a section 1291 fund is
Tax Consequences for
described next.
treated as an excess distribution.
Shareholders of a QEF
1. Income test. 75% or more of the
Excess distributions. An excess
A shareholder of a QEF must
corporation's gross income for its tax
distribution is the part of the distribution
annually include in gross income as
year is passive income (as defined in
received from a section 1291 fund in the
ordinary income its pro rata share of the
section 1297(b)).
current tax year that is greater than
ordinary earnings of the QEF and as
2. Asset test. At least 50% of the
125% of the average distributions
long-term capital gain its pro rata share
average percentage of assets
received in respect of such stock by the
of the net capital gain of the QEF.
(determined under section 1297(e))
shareholder during the 3 preceding tax
The shareholder may elect to extend
held by the foreign corporation during
years (or, if shorter, the portion of the
the time for payment of tax on its share
the tax year are assets that produce
shareholder's holding period before the
of the undistributed earnings of the QEF
passive income or that are held for the
current tax year). No part of a
(Election B) until the QEF election is
production of passive income.
distribution received or deemed
terminated.
received during the first tax year of the
If the QEF election is not made with
Basis for measuring assets. When
shareholder's holding period of the
respect to the first year of the
determining PFIC status using the asset
stock will be treated as an excess
shareholder’s holding period in the
test, a foreign corporation may use
distribution.
PFIC, the shareholder may be able to
adjusted basis if:
make a deemed sale election (Election
-2-
Instructions for Form 8621 (Rev. 12-2020)
The excess distribution is determined
Stock in certain PFICs described in
Specific Instructions
on a per share basis and is allocated to
Regulations section 1.1296-2(d).
each day in the shareholder's holding
For additional information, including
Important: All line references to Form
period of the stock. See section 1291(b)
special rules for regulated investment
1120 and Form 1040 are to the 2020
(3) for adjustments that are made when
companies (RICs) that own PFIC stock,
forms. Other entities should use the
determining if a distribution is an excess
see Regulations section 1.1296-1 and
comparable line on their tax return.
distribution.
1.1296-2.
Portions of an excess distribution are
Excepted Specified
treated differently. The portions
Tax Consequences
Foreign Financial Assets
allocated to the days in the current tax
Reported
After a PFIC shareholder elects to mark
year and the shareholder's tax years in
the stock to market under section 1296,
its holding period before the foreign
Check this box only if the Form 8621
the shareholder either:
corporation qualified as a PFIC
filer also files Form 8938, Statement of
(pre-PFIC years) are taxed as ordinary
1. Includes in income each year an
Specified Foreign Financial Assets, for
income. The portions allocated to the
amount equal to the excess, if any, of
the tax year and includes this form in the
days in the shareholder's tax years
the fair market value of the PFIC stock
total number of Forms 8621 reported on
(other than the current tax year) in its
as of the close of the tax year over the
line 4 of Part IV, Excepted Specified
holding period when the foreign
shareholder's adjusted basis in such
Foreign Financial Assets, of Form 8938.
corporation was a PFIC are not included
stock; or
For more information, see the
in income, but are subject to the
Instructions for Form 8938, generally,
2. Is allowed a deduction equal to
separate tax and interest charge set
and in particular, Duplicative Reporting
the lesser of:
forth in section 1291(c).
and the specific instructions for Part IV,
a. The excess, if any, of the
See the instructions for
Part
V, later.
Excepted Specified Foreign Financial
adjusted basis of the PFIC stock over its
Assets.
Exempt organizations. If a
fair market value as of the close of the
shareholder of a PFIC is a tax-exempt
tax year; or
Election To Be Treated as
organization, the rules of section 1291
b. The excess, if any, of the amount
a Qualifying Insurance
will apply only if a dividend from the
of mark-to-market gain included in the
Corporation
PFIC would be taxable to the
gross income of the PFIC shareholder
shareholder under subchapter F.
for prior tax years over the amount
Who may make the election. A U.S.
allowed such PFIC shareholder as a
Coordination of mark-to-market re-
person that is a shareholder of a
deduction for a loss with respect to such
gimes with section 1291.
corporation that fails to qualify as a
stock for prior tax years.
Shareholders of a PFIC that is marked
qualifying insurance corporation (QIC)
to market under section 1296 or any
(as defined in section 1297(f)(1)) solely
See the instructions for Part II,
other Code provision may be subject to
because its applicable insurance
Election
C, and
Part
IV, later, for more
section 1291 in the first tax year in
liabilities make up 25% or less of its total
information, including special rules that
which the shareholder marks to market
assets may elect to treat the stock as
may apply in the year that a mark-to-
the PFIC stock. See Regulations
stock of a qualifying insurance
market election is made.
sections 1.1291-1(c)(4) and 1.1296-1(i).
corporation if:
Basis adjustment. If the stock is held
Mark-to-Market Election
1. The corporation’s applicable
directly, the shareholder's adjusted
insurance liabilities make up at least
A U.S. shareholder of a PFIC may elect
basis in the PFIC stock is increased by
10% of its total assets; and
to mark to market the PFIC stock under
the amount included in income and
section 1296 if the stock is “marketable
2. Based on the applicable facts
decreased by any deductions allowed. If
stock.” See the instructions for
Election
and circumstances, the corporation is
the stock is owned indirectly through
C, later, for information on making this
predominantly engaged in an insurance
foreign entities, see Regulations section
election.
business, and its failure to satisfy the
1.1296-1(d)(2).
25% threshold is due solely to
Marketable stock. Marketable stock
Additional Information
runoff-related or rating-related
is:
circumstances involving such insurance
Required
PFIC stock that is regularly traded (as
business.
defined in Regulations section
Reportable transaction disclosure
1.1296-2(b)) on:
When to make the election.
statement. A 10% shareholder (by
1. A national securities exchange
Generally, the shareholder must make
vote or value) of a QEF may also be
that is registered with the Securities and
this election by the due date, including
required to file Form 8886 if the QEF is
Exchange Commission (SEC),
extensions, of the shareholder’s tax
considered to have participated in a
return for the tax year for which the
2. The national market system
reportable transaction pursuant to
taxpayer is relying on the alternative
established under section 11A of the
Regulations section 1.6011-4(c)(3)(i)
facts and circumstances test to meet
Securities Exchange Act of 1934, or
(G). See Form 8886, Reportable
the definition of a qualifying insurance
Transaction Disclosure Statement, and
3. A foreign securities exchange
corporation.
Regulations section 1.6011-4 for
that is regulated or supervised by a
additional information.
governmental authority of the country in
How to make the election. Follow
which the market is located and has the
these steps to make the election.
characteristics described in Regulations
1. Check the box on page 1 of Form
section 1.1296-2(c)(1)(ii).
8621.
Instructions for Form 8621 (Rev. 12-2020)
-3-
2. Provide the identifying
reference ID number with the new
Reference ID number. A reference ID
information for the shareholder and the
reference ID number assigned to the
number is required in the applicable
foreign corporation (Name, Address,
PFIC, QEF, or QIC.
entry space above Part I of the form only
Identifying Number (if any)) only. You do
In the case of an entity classification
in cases where no EIN was entered for
not have to complete any other part of
election that is made on behalf of a
the PFIC, QEF, or QIC. However, filers
the Form 8621 if you are only filing the
PFIC, QEF, or QIC on Form 8832,
are permitted to enter both an EIN and a
form to make this election.
Regulations section 301.6109-1(b)(2)(v)
reference ID number. If applicable, enter
requires the PFIC, QEF, or QIC to have
3. The U.S. person is required to
the reference ID number (defined
an EIN for this election. For the first year
attach either:
below) you have assigned to the PFIC,
that Form 8621 is filed after an entity
A statement provided by the foreign
QEF, or QIC.
classification election is made on behalf
corporation (and signed by a
A “reference ID number” is a number
of the PFIC, QEF, or QIC on Form 8832,
responsible officer of the foreign
established by or on behalf of the U.S.
the new EIN must be entered in the
corporation or an authorized
person identified at the top of page 1 of
applicable entry space above Part I of
representative of the foreign
the form that is assigned to a PFIC,
Form 8621 and the old reference ID
corporation) that the foreign corporation
QEF, or QIC with respect to which Form
number must be entered in the
satisfied the requirements of section
8621 reporting is required. These
applicable entry space just below. In
1297(f)(2) during the foreign
numbers are used to uniquely identify
subsequent years, the Form 8621 filer
corporation's tax year. Specifically, if the
the PFIC, QEF, or QIC in order to keep
may continue to enter both the EIN and
foreign corporation failed to qualify as a
track of the entity from tax year to tax
the reference ID number, but must enter
QIC under section 1297(f)(1) solely
year. The reference ID number must
at least the EIN.
because the ratio of applicable
meet the
requirements
set forth below.
insurance liabilities to total assets for
You must correlate the reference ID
the tax year is 25% or less, the
numbers as follows: New reference ID
Note. Because reference ID numbers
statement must (1) indicate that the ratio
number [space] Old reference ID
are established by or on the behalf of a
was at least 10%, along with a
number. If there is more than one old
U.S. person filing Form 8621, there is no
calculation of the ratio (with the resultant
reference ID number, you must enter a
need to apply to the IRS to request a
ratio double underlined); (2) include a
space between each such number. As
reference ID number or for permission
statement indicating whether the failure
indicated above, the
length
of a given
to use these numbers.
to satisfy the 25% test was the result of
reference ID number is limited to 50
runoff-related or rating-related
Note. In general, the reference ID
characters and each number must be
circumstances, along with a brief
number assigned to a PFIC, QEF, or
alphanumeric and no special characters
description of those circumstances; and
QIC on Form 8621 has relevance only
are permitted.
(3) include information that establishes
to Form 8621 and should not be used
Note. This correlation requirement
that the foreign corporation has met the
with respect to the PFIC, QEF, or QIC
applies only to the first year the new
“predominately engaged in an insurance
on other IRS forms.
reference ID number is used.
business” requirement described in
Requirements. The reference ID
Proposed Regulations section
number must be alphanumeric (defined
1.1297-4(d)(2).
Part I. Summary of Annual
below) and no special characters or
A publicly available statement (such
spaces are permitted. The length of a
Information
as in a public filing, disclosure
given reference ID number is limited to
statement, or other notice provided to
Who Must Complete Part I
50 characters.
U.S. persons that are shareholders of
For these purposes, the term
In general, all shareholders required to
the foreign corporation) that it satisfied
“alphanumeric” means the entry can be
file Form 8621 under section 1298(f)
the requirements of section 1297(f)(2)
alphabetical, numeric, or any
and the regulations thereunder must
during the foreign corporation's tax year.
combination of the two.
complete Part I. However, a shareholder
This publicly available statement must
of a PFIC that is marked to market
include the same three items noted in
The same reference ID number must
under a Code provision other than
the first bulleted item above.
be used consistently from tax year to tax
section 1296 (such as section 475) is
year with respect to a given PFIC, QEF,
Address and Identifying
not required to complete Part I unless it
or QIC. If for any reason a reference ID
is subject to section 1291 with respect
Number
number falls out of use (for example, the
to the PFIC pursuant to Regulations
PFIC, QEF, or QIC no longer exists due
section 1.1291-1(c)(4)(ii). See TD 9806.
Address. Include the suite, room, or
to disposition or liquidation), the
other unit number after the street
reference ID number used for that PFIC,
Shareholders filing a joint return may
address. If the post office does not
QEF, or QIC cannot be used again for
file a single Form 8621 with respect to a
deliver mail to the street address and
another PFIC, QEF, or QIC for purposes
single PFIC in which each joint filer
the shareholder has a P.O. box, enter
of Form 8621 reporting.
owns an interest.
the box number instead.
There are some situations that
Shareholders that are the first U.S.
warrant correlation of a new reference
Identifying number. Individuals
person in the chain of ownership.
ID number with a previous reference ID
should enter a social security number or
Regulations section 1.1298-1 generally
number when assigning a new
a taxpayer identification number issued
requires a U.S. person that is at the
reference ID number to a PFIC, QEF, or
by the IRS. All other entities should
lowest tier in a chain of ownership (that
QIC. For example:
enter an employer identification number
is, the first U.S. person in the chain of
In the case of a merger or acquisition,
(EIN).
ownership) and that is a shareholder
a Form 8621 filer must use a reference
(including an indirect shareholder) of a
ID number which correlates the previous
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Instructions for Form 8621 (Rev. 12-2020)
PFIC to complete Part I for each PFIC
A U.S. grantor of a domestic grantor
complete Part I with respect to indirect
owned by that shareholder during the
trust is not required to complete Part I if
ownership of a specific section 1291
shareholder’s tax year.
the trust is a domestic liquidating trust or
fund if the shareholder meets the
a widely held fixed investment trust, as
$5,000 exception with respect to the
Specific filing requirements apply
described in Regulations section
section 1291 fund on the last day of the
with respect to
domestic grantor
trusts,
1.1298-1(b)(3)(i). In these
shareholder’s tax year and the
as described further in these
circumstances, the domestic grantor
shareholder does not receive an excess
Instructions.
trust is required to complete Part I.
distribution from, or recognize gain on
Exceptions to these filing
In certain situations, a shareholder
the sale or disposition of the stock of,
requirements are described below
who is a member or beneficiary of (or
the section 1291 fund. For purposes of
under
Exceptions to Filing Part
I.
participant in) an arrangement treated
determining whether a shareholder
as a foreign pension fund under a U.S.
satisfies the $5,000 threshold, the
Shareholders that are not the first
income tax treaty that owns an interest
shareholder takes into account only the
U.S. person in the chain of owner-
in a PFIC is not required to complete
value of the shareholder’s proportionate
ship. In general, an indirect
Part I with respect to the PFIC. See
share of the section 1291 fund.
shareholder that is not the first U.S.
Regulations section 1.1298-1(c)(4).
person in the chain of ownership is not
For more information, see
A U.S. beneficiary of a foreign
required to complete Part I unless the
Regulations section 1.1298-1(c)(2).
nongrantor trust or foreign estate is not
indirect shareholder:
Line Instructions
Is treated as receiving an excess
required to complete Part I with respect
distribution from the PFIC;
to the stock of the PFIC that is owned by
Line 1. Describe each class of shares
Is treated as recognizing gain that is
the trust or estate unless it has made a
held by the shareholder.
treated as an excess distribution as a
QEF or section 1296 mark-to-market
Line 2. Provide the date during the tax
result of a disposition of the PFIC;
election, received an excess
year that the shares were acquired, if
Is required to include an amount in
distribution, or recognized gain treated
applicable.
income under section 1293(a) with
as an excess distribution with respect to
respect to the PFIC, unless another
the stock of the PFIC. See Regulations
Line 3. List the number of shares held
shareholder through which the indirect
section 1.1298-1(b)(3)(ii).
at the end of the tax year.
shareholder owns the PFIC files under
Exempt organizations. In general, if
Line 4. Indicate the value of the shares
section 1298(f) with respect to the PFIC
a shareholder of a PFIC is a tax-exempt
held at the end of the tax year.
and no other exception applies;
organization, the shareholder is
Shareholders may rely upon periodic
Is required to include an amount in
required to complete Part I only if
account statements provided at least
income under section 1296(a) with
income derived with respect to the PFIC
annually to determine the value of a
respect to the PFIC, unless another
stock would be taxable to the
PFIC unless the shareholder has actual
shareholder through which the indirect
shareholder under subchapter F. See
knowledge or reason to know based on
shareholder owns the PFIC files under
Regulations section 1.1298-1(c)(1).
readily accessible information that the
section 1298(f) with respect to the PFIC;
statements do not reflect a reasonable
Exception if aggregate value of
or
estimate of the PFIC’s value.
shareholder’s PFIC stock is $25,000
Is required to report the status of a
or less. A shareholder is not required
section 1294 election with respect to the
Line 5. Indicate the type of PFIC and
to complete Part I with respect to a
PFIC.
the amount of any excess distribution or
specific section 1291 fund if the
See Regulations section 1.1298-1(b)
gain treated as an excess distribution
shareholder meets the $25,000
(2) for further information.
under section 1291, inclusion under
exception on the last day of the
section 1293, and inclusion or
Domestic grantor trusts. In general,
shareholder’s tax year and the
deduction under section 1296.
a U.S. grantor of a domestic grantor
shareholder does not receive an excess
trust that owns an interest in a PFIC
distribution from, or recognize gain on
Note. In cases in which a shareholder’s
(directly or indirectly) through one or
the sale or disposition of the stock of,
ownership interest in a PFIC is not
more foreign entities must complete
the section 1291 fund. For purposes of
denominated in shares, the shareholder
Part I with respect to that PFIC interest.
determining whether a shareholder
must provide the information for lines 1
See Regulations sections 1.1291-1(b)
satisfies the $25,000 threshold, the
through 4 based on its form of
(8)(iii)(D) and 1.1298-1(b)(1)(iii). In
shareholder takes into account all PFIC
ownership in the PFIC.
those circumstances, a domestic
stock (QEFs, section 1291 funds, and
grantor trust is not required to complete
PFIC stock subject to a section 1296
Part II. Elections
Part I with respect to the stock of the
mark-to-market election) owned directly
PFIC that is owned by the grantor. For
or indirectly other than PFIC stock
A. Election To Treat the PFIC as
certain exceptions, see Regulations
owned through another U.S. person or
a QEF (Section 1295 Election)
section 1.1298-1(b)(3)(i).
PFIC stock owned through another
PFIC. Shareholders filing a joint return
Who May Make the Election
Exceptions to Filing Part I
have a combined threshold of $50,000
Generally, a U.S. person that owns
A shareholder is exempt from
instead of $25,000 for purposes of this
stock in a PFIC, directly or indirectly,
completing Part I if it meets one of the
exception.
may make Election A to treat the PFIC
exceptions described below.
For more information, see
as a QEF.
Special rules for estates and trusts.
Regulations section 1.1298-1(c)(2).
Certain U.S. grantors and beneficiaries
Note. A separate election must be
Exception if the value of sharehold-
of estates and trusts may qualify for an
made for each PFIC that the
er’s indirect PFIC stock is $5,000 or
exception to filing Part I.
shareholder wants to treat as a QEF.
less. A shareholder is not required to
Instructions for Form 8621 (Rev. 12-2020)
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