8621 Instructions for Form 8621

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Instructions for Form 8621
(Rev. December 2024)

(Use with the December 2018 revision of Form 8621.)
Information Return by a Shareholder of a Passive Foreign Investment Company or
Qualified Electing Fund

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Section references are to the Internal Revenue Code unless
otherwise noted.

General Instructions

Future Developments

Who Must File

For the latest information about developments relating to
Form 8621, and its instructions, such as legislation enacted
after they were published, go to IRS.gov/Form8621.

What’s New

On page 2, a new paragraph was added to the "Basis for
measuring assets" section under the definition of Passive
Foreign Investment Company. This new paragraph was
added to clarify how to make the election described in
Regulations section 1.1297-1(d)(1)(iv).

With respect to certain amounts on Form 8621 that are
reported on income tax returns, some of the references to
Form 1120, Schedule J (on pages 12 through 15 of these
instructions) have been updated to reflect the redesign of
Form 1120, Schedule J.

The line 16f instructions were modified to update the
Revenue Ruling for the rates for interest determined under
section 6621.

Reminders
Election to be treated as a Qualifying Insurance Corporation. A checkbox was added on page 1 of Form 8621 for
shareholders of stock of a foreign corporation that elect to
treat such stock as the stock of a qualifying insurance
corporation under section 1297(f)(2), which was added by
section 14501 of the Tax Cuts and Jobs Act (TCJA).
Final regulations were issued under sections 1297 and
1298 (T.D. 9936, 86 FR 4571, Jan. 15, 2021, as amended by
T.D. 9936, 86 FR 13648, Mar. 10, 2021). The regulations
under section 1297 changed the requirements for the
election of a U.S. person that is a shareholder of a foreign
corporation to treat stock of a foreign corporation as stock of
a qualifying insurance corporation. The rules (1) expand the
availability of the election to include a U.S. person who is
considered to own stock in the foreign corporation by reason
of holding an option; (2) provide a deemed election for small
shareholders in publicly traded companies (as described in
Regulations section 1.1297-4(d)(5)(iv)); (3) no longer require
a U.S. shareholder making the election to attach a copy of the
statement from the foreign corporation described in
Regulations section 1.1297-4(d)(5) to the Form 8621
attached to its federal income tax return for the tax year to
which it relates; and (4) allow a U.S. shareholder to make the
election by attaching the Form 8621 to its amended federal
income tax return for the tax year to which it relates, if the
U.S. shareholder can demonstrate that the reason for not
filing the form with its original return was due to reasonable
cause. See Election To Be Treated as a Qualifying Insurance
Corporation, later.
Nov 22, 2024

Qualifying Insurance Corporation

A U.S. person that owns stock (or holds an option to
purchase stock) of a foreign corporation and elects to treat
such stock as the stock of a qualifying insurance corporation
under the alternative facts and circumstances test within the
meaning of section 1297(f)(2) and Regulations section
1.1297-4(d) must file a limited-information Form 8621. For
details, see Election To Be Treated as a Qualifying Insurance
Corporation, later.

Passive Foreign Investment Corporation (PFIC)

Generally, a U.S. person that is a direct or indirect
shareholder of a PFIC must file Form 8621 for each tax year
under the following five circumstances if the U.S. person:
1. Receives certain direct or indirect distributions from a
PFIC,
2. Recognizes gain on a direct or indirect disposition of
PFIC stock,
3. Is reporting information with respect to a Qualified
Electing Fund (QEF) or section 1296 mark-to-market
election,
4. Is making an election reportable in Part II of the form,
or
5. Is required to file an annual report pursuant to section
1298(f). See the Part I instructions, later, for more information
regarding the person that must file pursuant to section
1298(f).
A separate Form 8621 must be filed for each PFIC in
which stock is held directly or indirectly. In the case of a chain
of ownership, under the five circumstances described above,
unless otherwise provided, if the shareholder owns one PFIC
and through that PFIC owns one or more other PFICs, the
shareholder must file a Form 8621 for each PFIC in the chain.
A single Form 8621 may be filed with respect to a PFIC to
report the information required by section 1298(f) (that is,
Part I), as well as to report information in Parts III through VI
of the form and to make elections in Part II of the form. For
example, a U.S. person that has made a section 1296
mark-to-market election with respect to a PFIC will file a
single Form 8621 and complete Part I and Part IV.
Indirect shareholder. Generally, a U.S. person is an indirect
shareholder of a PFIC if it is:
• A 50%-or-more shareholder of a foreign corporation that is
not a PFIC and that directly or indirectly owns stock of a
PFIC,
• A shareholder of a PFIC where the PFIC itself is a
shareholder of another PFIC,

Instructions for Form 8621 (Rev. 12-2024) Catalog Number 10784P
Department of the Treasury Internal Revenue Service www.irs.gov

• A 50%-or-more shareholder of a domestic corporation
where the domestic corporation owns a section 1291 fund, or
• A direct or indirect owner of a pass-through entity where
the pass-through entity itself is a direct or indirect
shareholder of a PFIC.
For more information on determining whether a U.S.
person is an indirect shareholder, see Regulations section
1.1291-1(b)(8).
For purposes of these rules, a pass-through entity is a
partnership, S corporation, trust, or estate.
However, a U.S. person that owns stock of a PFIC through
a tax-exempt organization or account described in the list
below is not treated as a shareholder of the PFIC.
• An organization or an account that is exempt from tax
under section 501(a) because it is described in section
501(c), 501(d), or 401(a).
• A state college or university described in section 511(a)(2)
(B).
• A plan described in section 403(b) or 457(b).
• An individual retirement plan or annuity as defined in
section 7701(a)(37).
• A qualified tuition program described in section 529 or
530.
• A qualified ABLE program described in section 529A.

produce passive income or that are held for the production of
passive income.
Basis for measuring assets. When determining PFIC
status using the asset test, a foreign corporation may use
adjusted basis if:
1. The corporation is not publicly traded for the tax year;
and
2. The corporation (a) is a controlled foreign corporation
within the meaning of section 957 (CFC), or (b) makes an
election to use adjusted basis.

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Interest holder of pass-through entities. In general, the
following interest holders must file Form 8621, unless an
exception applies.
1. A U.S. person that is an interest holder of a foreign
pass-through entity that is a direct or indirect shareholder of a
PFIC.
2. A U.S. person that is considered (under sections 671
through 679) the shareholder of PFIC stock held in trust.
3. A U.S. partnership, S corporation, U.S. trust (other
than a trust that is subject to sections 671 through 679 for the
PFIC stock), or U.S. estate that is a direct or indirect
shareholder of a PFIC.
Note. U.S. persons that are interest holders of pass-through
entities described in 3 above must file Form 8621 if the
pass-through entity fails to file such form or the U.S. person is
required to recognize any income under section 1291.

When and Where To File

Attach Form 8621 to the shareholder's tax return (or, if
applicable, partnership or exempt organization return) and file
both by the due date, including extensions, of the return at
the Internal Revenue Service Center where the tax return is
required to be filed.
If you are not required to file an income tax return or other
return for the tax year, file Form 8621 directly with the Internal
Revenue Service Center, Ogden, UT 84201-0201.

Definitions and Special Rules
Passive Foreign Investment Company (PFIC)

A foreign corporation is a PFIC if it meets either the income or
asset test described next.
1. Income test. 75% or more of the corporation's gross
income for its tax year is passive income (as defined in
section 1297(b)).
2. Asset test. At least 50% of the average percentage of
assets (determined under section 1297(e)) held by the
foreign corporation during the tax year are assets that
2

The election described in 2 above can be made either by
the corporation or by its owner. If made by the owner, the
election must be made according to the rules of Regulations
section 1.1297-1(d)(1)(iv).
Publicly traded corporations must use fair market value
when determining PFIC status using the asset test.

Look-thru rule. When determining if a foreign corporation is
a PFIC, the foreign corporation is treated as if it directly held
its proportionate share of the assets and directly received its
proportionate share of the income of any corporation in which
it owns at least 25% of the stock (by value).
CFC overlap rule. A 10% or more U.S. shareholder (defined
in section 951(b)) that includes in income its pro rata share of
subpart F income for stock of a CFC that is also a PFIC will
not generally be subject to the PFIC provisions for the same
stock during the qualified portion of the shareholder's holding
period of the stock in the PFIC. This exception does not apply
to option holders. For more information, see section 1297(d).
Note. The attribution rules of section 1298(a)(2)(B) will
continue to apply even if the foreign corporation is not treated
as a PFIC with respect to the shareholder under section
1297(d).

Qualified Electing Fund (QEF) Election

A PFIC is a QEF if a U.S. person who is a direct or indirect
shareholder of the PFIC elects (under section 1295(b)) to
treat the PFIC as a QEF and complies with the requirements
described in section 1295(a)(2). See the instructions for
Election A, later, for information on making this election.

Tax Consequences for Shareholders of a QEF

• A shareholder of a QEF must annually include in gross
income, as ordinary income, its pro rata share of the ordinary
earnings of the QEF and as long-term capital gain its pro rata
share of the net capital gain of the QEF.
• The shareholder may elect to extend the time for payment
of tax on its share of the undistributed earnings of the QEF
(Election B) until the QEF election is terminated.
• If the QEF election is not made with respect to the first year
of the shareholder’s holding period in the PFIC, the
shareholder may be able to make a deemed sale election
(Election D) or deemed dividend election (Election E) (if
eligible). If the shareholder properly makes a deemed sale
election or deemed dividend election in connection with its
QEF election, then the PFIC will become a pedigreed QEF
(as defined in Regulations section 1.1291-9(j)(2)(ii)) with
respect to the shareholder.
Note. A shareholder that receives a distribution from an
unpedigreed QEF (defined in Regulations section 1.1291-9(j)

Instructions for Form 8621 (Rev. 12-2024)

(2)(iii)) is also subject to the rules applicable to a shareholder
of a section 1291 fund, later.
Basis adjustments. A shareholder's basis in the stock of a
QEF, or in any property through which the shareholder is
treated as owning stock of a QEF, is increased by the
earnings included in gross income and decreased by a
distribution from the QEF to the extent of previously taxed
amounts.

Mark-to-Market Election

A U.S. shareholder of a PFIC may elect to mark to market the
PFIC stock under section 1296 if the stock is “marketable
stock.” See the instructions for Election C, later, for
information on making this election.

Marketable stock. Marketable stock is:
• PFIC stock that is regularly traded (as defined in
Regulations section 1.1296-2(b)) on:
1. A national securities exchange that is registered with
the Securities and Exchange Commission (SEC),
2. The national market system established under section
11A of the Securities Exchange Act of 1934, or
3. A foreign securities exchange that is regulated or
supervised by a governmental authority of the country in
which the market is located and has the characteristics
described in Regulations section 1.1296-2(c)(1)(ii).
• Stock in certain PFICs described in Regulations section
1.1296-2(d).

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Section 1291 Fund

A PFIC is a section 1291 fund if:
1. The shareholder did not elect to treat the PFIC as a
QEF or make a mark-to-market election with respect to the
PFIC, or
2. The PFIC is an unpedigreed QEF (as defined in
Regulations section 1.1291-9(j)(2)(iii)).

Tax Consequences for Shareholders of a Section
1291 Fund

Shareholders of a section 1291 fund are subject to special
rules when they receive an excess distribution (defined
below) from, or recognize gain on the sale or disposition of
the stock of, a section 1291 fund. A distribution may be partly
or wholly an excess distribution. The entire amount of gain
from the disposition of a section 1291 fund is treated as an
excess distribution.

Excess distributions. An excess distribution is the part of
the distribution received from a section 1291 fund in the
current tax year that is greater than 125% of the average
distributions received in respect of such stock by the
shareholder during the 3 preceding tax years (or, if shorter,
the portion of the shareholder's holding period before the
current tax year). No part of a distribution received or
deemed received during the first tax year of the shareholder's
holding period of the stock will be treated as an excess
distribution.
The excess distribution is determined on a per share basis
and is allocated to each day in the shareholder's holding
period of the stock. See section 1291(b)(3) for adjustments
that are made when determining if a distribution is an excess
distribution.
Portions of an excess distribution are treated differently.
The portions allocated to the days in the current tax year and
the shareholder's tax years in its holding period before the
foreign corporation qualified as a PFIC (pre-PFIC years) are
taxed as ordinary income. The portions allocated to the days
in the shareholder's tax years (other than the current tax year)
in its holding period when the foreign corporation was a PFIC
are not included in income, but are subject to the separate
tax and interest charge set forth in section 1291(c).
See the instructions for Part V, later.
Exempt organizations. If a shareholder of a PFIC is a
tax-exempt organization, the rules of section 1291 will apply
only if a dividend from the PFIC would be taxable to the
shareholder under subchapter F.
Coordination of mark-to-market regimes with section
1291. Shareholders of a PFIC that is marked to market
under section 1296 or any other Code provision may be
subject to section 1291 in the first tax year in which the
shareholder marks to market the PFIC stock. See
Regulations sections 1.1291-1(c)(4) and 1.1296-1(i).
Instructions for Form 8621 (Rev. 12-2024)

For additional information, including special rules for
regulated investment companies (RICs) that own PFIC stock,
see Regulations section 1.1296-1 and 1.1296-2.

Tax Consequences

After a PFIC shareholder elects to mark the stock to market
under section 1296, the shareholder either:
1. Includes in income each year an amount equal to the
excess, if any, of the fair market value of the PFIC stock as of
the close of the tax year over the shareholder's adjusted
basis in such stock; or
2. Is allowed a deduction equal to the lesser of:
a. The excess, if any, of the adjusted basis of the PFIC
stock over its fair market value as of the close of the tax year;
or
b. The excess, if any, of the amount of mark-to-market
gain included in the gross income of the PFIC shareholder for
prior tax years over the amount allowed such PFIC
shareholder as a deduction for a loss with respect to such
stock for prior tax years.
See the instructions for Part II, Election C, and Part IV,
later, for more information, including special rules that may
apply in the year that a mark-to-market election is made.
Basis adjustment. If the stock is held directly, the
shareholder's adjusted basis in the PFIC stock is increased
by the amount included in income and decreased by any
deductions allowed. If the stock is owned indirectly through
foreign entities, see Regulations section 1.1296-1(d)(2).

Additional Information Required
Reportable transaction disclosure statement. A 10%
shareholder (by vote or value) of a QEF may also be required
to file Form 8886 if the QEF is considered to have
participated in a reportable transaction pursuant to
Regulations section 1.6011-4(c)(3)(i)(G). See Form 8886,
Reportable Transaction Disclosure Statement, and
Regulations section 1.6011-4 for additional information.

3

Specific Instructions
Important: All line references to Form 1120 and Form 1040
are to the 2024 forms. Other entities should use the
comparable line on their tax return.

Excepted Specified Foreign Financial
Assets Reported

corporation) that it satisfied the requirements of section
1297(f)(2) and Regulations section 1.1297-4(d)(1) during the
foreign corporation's applicable reporting period (as defined
in Regulations section 1.1297-4(f)(4)). This publicly available
statement must include the same three items noted in the
first bulleted item above. However, a U.S. shareholder may
not rely upon the foreign corporation’s statement described in
this bullet if the U.S. person knows or has reason to know
based upon reasonably accessible information that the
statement was incorrect.

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Check this box only if the Form 8621 filer also files Form
8938, Statement of Specified Foreign Financial Assets, for
the tax year and includes this form in the total number of
Forms 8621 reported on line 4 of Part IV, Excepted Specified
Foreign Financial Assets, of Form 8938. For more
information, see the Instructions for Form 8938, generally,
and in particular, Duplicative Reporting and the specific
instructions for Part IV, Excepted Specified Foreign Financial
Assets.

Election To Be Treated as a Qualifying
Insurance Corporation

Who may make the election. A U.S. person that is a
shareholder (or holds an option to purchase stock) of a
corporation that fails to qualify as a qualifying insurance
corporation (QIC) (as defined in section 1297(f)(1)) solely
because its applicable insurance liabilities make up 25% or
less of its total assets may elect to treat the stock as stock of
a qualifying insurance corporation under the alternative facts
and circumstances test set forth in section 1297(f)(2) and
Regulations section 1.1297-4(d) if:
1. The foreign corporation’s applicable insurance
liabilities make up at least 10% of its total assets; and
2. Based on the applicable facts and circumstances, the
foreign corporation is predominantly engaged in an insurance
business, and its failure to satisfy the 25% threshold is due
solely to runoff-related or rating-related circumstances
involving such insurance business.

The U.S. shareholder may make the election under
section 1297(f)(2) for its tax year if:
• The foreign corporation directly provides the U.S.
shareholder a statement, signed by a responsible officer of
the foreign corporation or an authorized representative of the
foreign corporation, that the foreign corporation satisfied the
requirements of section 1297(f)(2) and Regulations section
1.1297-4(d)(1) during the foreign corporation's applicable
reporting period (as defined in Regulations section
1.1297-4(f)(4)). Specifically, if the foreign corporation failed to
qualify as a QIC under section 1297(f)(1) solely because the
ratio of applicable insurance liabilities to total assets for the
tax year is 25% or less, the statement must (1) indicate that
the ratio was at least 10%, along with a calculation of the ratio
(with the resultant ratio double underlined); (2) include a
statement indicating whether the failure to satisfy the 25%
test was the result of runoff-related or rating-related
circumstances, along with a brief description of those
circumstances; and (3) include information that establishes
that the foreign corporation has met the “predominantly
engaged in an insurance business” requirement described in
Regulations section 1.1297-4(d)(2).
• The foreign corporation (or its foreign parent corporation
on its behalf) makes a publicly available statement (such as
in a public filing, disclosure statement, or other notice
provided to U.S. persons that are shareholders of the foreign
4

Note. The final regulations do not require the U.S. person to
attach a copy of either of the above statements to Form 8621.
See Regulations section 1.1297-4(d)(5).

When to make the election. Generally, the U.S.
shareholder must make this election by the due date,
including extensions, of the U.S. person’s tax return for the
tax year for which the taxpayer is relying on the alternative
facts and circumstances test within the meaning of section
1297(f)(2) and Regulations section 1.1297-4(d) to meet the
definition of a qualifying insurance corporation. A U.S. person
can attach the Form 8621 to an amended return for the tax
year of the U.S. person to which the election relates if the
U.S. person can demonstrate that the reason for not filing the
form with its original return was due to reasonable cause.
How to make the election. Follow these steps to make the
election.
1. Check the box on page 1 of Form 8621.
2. Provide the identifying information for the U.S. person
and the foreign corporation (Name, Address, Identifying
Number (if any)) only. You do not have to complete any other
part of the Form 8621 if you are only filing the form to make
this election.
Deemed election for publicly traded companies. A
U.S. person who owns publicly traded stock in a foreign
corporation will be deemed to make the election under
section 1297(f)(2) with respect to the foreign corporation and
its subsidiaries if the following requirements are satisfied.
• The stock of the foreign corporation that is owned by the
U.S. person (including stock owned indirectly) has a value of
$25,000 or less ($50,000 or less in the case of a joint return)
on the last day of the U.S. person's tax year and on any day
during the tax year on which the U.S. person disposes of
stock of the foreign corporation; and
• If the U.S. person owns stock of the foreign corporation
indirectly through a domestic partnership, domestic trust,
domestic estate, or S corporation (a domestic pass-through
entity), the stock of the foreign corporation that is owned by
the domestic pass-through entity has a value of $25,000 or
less on the last day of the tax year of the domestic
pass-through entity that ends with or within the U.S. person's
tax year and on any day during the tax year of the domestic
pass-through entity on which it disposes of stock of the
foreign corporation.
For these purposes, stock is publicly traded if it would be
treated as marketable stock within the meaning of section
1296(e) and Regulations section 1.1296-2 (without regard to
Regulations section 1.1296-2(d)) if the election under section
1297(f)(2) is not made.

Address and Identifying Number
Address. Include the suite, room, or other unit number after
the street address. If the post office does not deliver mail to
Instructions for Form 8621 (Rev. 12-2024)

the street address and the shareholder has a P.O. box, enter
the box number instead.
Identifying number. Individuals should enter a social
security number or a taxpayer identification number issued by
the IRS. All other entities should enter an employer
identification number (EIN).
Reference ID number. A reference ID number is required in
the applicable entry space above Part I of the form only in
cases where no EIN was entered for the PFIC, QEF, or QIC.
However, filers are permitted to enter both an EIN and a
reference ID number. If applicable, enter the reference ID
number (defined below) you have assigned to the PFIC, QEF,
or QIC.
A “reference ID number” is a number established by or on
behalf of the U.S. person identified at the top of page 1 of the
form that is assigned to a PFIC, QEF, or QIC with respect to
which Form 8621 reporting is required. These numbers are
used to uniquely identify the PFIC, QEF, or QIC in order to
keep track of the entity from tax year to tax year. The
reference ID number must meet the requirements set forth
below.

You must correlate the reference ID numbers as follows:
New reference ID number [space] Old reference ID number. If
there is more than one old reference ID number, you must
enter a space between each such number. As indicated
above, the length of a given reference ID number is limited to
50 characters and each number must be alphanumeric and
no special characters are permitted.
Note. This correlation requirement applies only to the first
year the new reference ID number is used.

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Note. Because reference ID numbers are established by or
on the behalf of a U.S. person filing Form 8621, there is no
need to apply to the IRS to request a reference ID number or
for permission to use these numbers.

Note. In general, the reference ID number assigned to a
PFIC, QEF, or QIC on Form 8621 has relevance only to Form
8621 and should not be used with respect to the PFIC, QEF,
or QIC on other IRS forms.

Requirements. The reference ID number must be
alphanumeric (defined below), and no special characters or
spaces are permitted. The length of a given reference ID
number is limited to 50 characters.
For these purposes, the term “alphanumeric” means the
entry can be alphabetical, numeric, or any combination of the
two.
The same reference ID number must be used consistently
from tax year to tax year with respect to a given PFIC, QEF, or
QIC. If for any reason a reference ID number falls out of use
(for example, the PFIC, QEF, or QIC no longer exists due to
disposition or liquidation), the reference ID number used for
that PFIC, QEF, or QIC cannot be used again for another
PFIC, QEF, or QIC for purposes of Form 8621 reporting.
There are some situations that warrant correlation of a
new reference ID number with a previous reference ID
number when assigning a new reference ID number to a
PFIC, QEF, or QIC. For example:
• In the case of a merger or acquisition, a Form 8621 filer
must use a reference ID number that correlates the previous
reference ID number with the new reference ID number
assigned to the PFIC, QEF, or QIC.
• In the case of an entity classification election that is made
on behalf of a PFIC, QEF, or QIC on Form 8832, Regulations
section 301.6109-1(b)(2)(v) requires the PFIC, QEF, or QIC
to have an EIN for this election. For the first year that Form
8621 is filed after an entity classification election is made on
behalf of the PFIC, QEF, or QIC on Form 8832, the new EIN
must be entered in the applicable entry space above Part I of
Form 8621 and the old reference ID number must be entered
in the applicable entry space just below. In subsequent years,
the Form 8621 filer may continue to enter both the EIN and
the reference ID number, but must enter at least the EIN.
Instructions for Form 8621 (Rev. 12-2024)

Part I. Summary of Annual
Information

Who Must Complete Part I

In general, all shareholders required to file Form 8621 under
section 1298(f) and the regulations thereunder must
complete Part I. However, a shareholder of a PFIC that is
marked to market under a Code provision other than section
1296 (such as section 475) is not required to complete Part I
unless it is subject to section 1291 with respect to the PFIC
pursuant to Regulations section 1.1291-1(c)(4)(ii). See T.D.
9806.
Shareholders filing a joint return may file a single Form
8621 with respect to a single PFIC in which each joint filer
owns an interest.

Shareholders that are the first U.S. person in the chain
of ownership. Regulations section 1.1298-1 generally
requires a U.S. person that is at the lowest tier in a chain of
ownership (that is, the first U.S. person in the chain of
ownership) and that is a shareholder (including an indirect
shareholder) of a PFIC to complete Part I for each PFIC
owned by that shareholder during the shareholder’s tax year.
Specific filing requirements apply with respect to domestic
grantor trusts, as described further in these Instructions.
Exceptions to these filing requirements are described
below under Exceptions to Filing Part I.

Shareholders that are not the first U.S. person in the
chain of ownership. In general, an indirect shareholder that
is not the first U.S. person in the chain of ownership is not
required to complete Part I unless the indirect shareholder:
• Is treated as receiving an excess distribution from the
PFIC;
• Is treated as recognizing gain that is treated as an excess
distribution as a result of a disposition of the PFIC;
• Is required to include an amount in income under section
1293(a) with respect to the PFIC, unless another shareholder
through which the indirect shareholder owns the PFIC files
under section 1298(f) with respect to the PFIC and no other
exception applies;
• Is required to include an amount in income under section
1296(a) with respect to the PFIC, unless another shareholder
through which the indirect shareholder owns the PFIC files
under section 1298(f) with respect to the PFIC; or
• Is required to report the status of a section 1294 election
with respect to the PFIC.
See Regulations section 1.1298-1(b)(2) for further
information.
Domestic grantor trusts. In general, a U.S. grantor of a
domestic grantor trust that owns an interest in a PFIC
(directly or indirectly) through one or more foreign entities
must complete Part I with respect to that PFIC interest. See
Regulations sections 1.1291-1(b)(8)(iii)(D) and 1.1298-1(b)
5

(1)(iii). In those circumstances, a domestic grantor trust is not
required to complete Part I with respect to the stock of the
PFIC that is owned by the grantor. For certain exceptions,
see Regulations section 1.1298-1(b)(3)(i).

takes into account only the value of the shareholder’s
proportionate share of the section 1291 fund.
For more information, see Regulations section 1.1298-1(c)
(2).

Exceptions to Filing Part I

Line Instructions

A shareholder is exempt from completing Part I if it meets one
of the exceptions described below.

Line 1. Describe each class of shares held by the
shareholder.

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Special rules for estates and trusts. Certain U.S.
grantors and beneficiaries of estates and trusts may qualify
for an exception to filing Part I.
• A U.S. grantor of a domestic grantor trust is not required to
complete Part I if the trust is a domestic liquidating trust or a
widely held fixed investment trust, as described in
Regulations section 1.1298-1(b)(3)(i). In these
circumstances, the domestic grantor trust is required to
complete Part I.
• In certain situations, a shareholder who is a member or
beneficiary of (or participant in) an arrangement treated as a
foreign pension fund under a U.S. income tax treaty that
owns an interest in a PFIC is not required to complete Part I
with respect to the PFIC. See Regulations section
1.1298-1(c)(4).
• A U.S. beneficiary of a foreign nongrantor trust or foreign
estate is not required to complete Part I with respect to the
stock of the PFIC that is owned by the trust or estate unless it
has made a QEF or section 1296 mark-to-market election,
received an excess distribution, or recognized gain treated as
an excess distribution with respect to the stock of the PFIC.
See Regulations section 1.1298-1(b)(3)(ii).
Exempt organizations. In general, if a shareholder of a
PFIC is a tax-exempt organization, the shareholder is
required to complete Part I only if income derived with
respect to the PFIC stock would be taxable to the
shareholder under subchapter F. See Regulations section
1.1298-1(c)(1).

Exception if aggregate value of shareholder’s PFIC
stock is $25,000 or less. A shareholder is not required to
complete Part I with respect to a specific section 1291 fund if
the shareholder meets the $25,000 exception on the last day
of the shareholder’s tax year and the shareholder does not
receive an excess distribution from, or recognize gain on the
sale or disposition of the stock of, the section 1291 fund. For
purposes of determining whether a shareholder satisfies the
$25,000 threshold, the shareholder takes into account all
PFIC stock (QEFs, section 1291 funds, and PFIC stock
subject to a section 1296 mark-to-market election) owned
directly or indirectly other than PFIC stock owned through
another U.S. person or PFIC stock owned through another
PFIC. Shareholders filing a joint return have a combined
threshold of $50,000 instead of $25,000 for purposes of this
exception.
For more information, see Regulations section 1.1298-1(c)
(2).
Exception if the value of shareholder’s indirect PFIC
stock is $5,000 or less. A shareholder is not required to
complete Part I with respect to indirect ownership of a
specific section 1291 fund if the shareholder meets the
$5,000 exception with respect to the section 1291 fund on
the last day of the shareholder’s tax year and the shareholder
does not receive an excess distribution from, or recognize
gain on the sale or disposition of the stock of, the section
1291 fund. For purposes of determining whether a
shareholder satisfies the $5,000 threshold, the shareholder
6

Line 2. Provide the date during the tax year that the shares
were acquired, if applicable.
Line 3. List the number of shares held at the end of the tax
year.
Line 4. Indicate the value of the shares held at the end of
the tax year. Shareholders may rely upon periodic account
statements provided at least annually to determine the value
of a PFIC unless the shareholder has actual knowledge or
reason to know based on readily accessible information that
the statements do not reflect a reasonable estimate of the
PFIC’s value.
Line 5. Indicate the type of PFIC and the amount of any
excess distribution or gain treated as an excess distribution
under section 1291, inclusion under section 1293, and
inclusion or deduction under section 1296.
Note. In cases in which a shareholder’s ownership interest in
a PFIC is not denominated in shares, the shareholder must
provide the information for lines 1 through 4 based on its form
of ownership in the PFIC.

Part II. Elections

A. Election To Treat the PFIC as a QEF (Section
1295 Election)
Who May Make the Election
Generally, a U.S. person that owns stock in a PFIC, directly or
indirectly, may make Election A to treat the PFIC as a QEF.
Note. A separate election must be made for each PFIC that
the shareholder wants to treat as a QEF.
Exception. A tax-exempt organization that is not taxable
under section 1291 may not make the election. In addition, a
tax-exempt organization that is not taxable under section
1291 is not subject to a QEF election made by a
pass-through entity.
Chain of ownership. In a chain of ownership, only the first
U.S. person that is a direct or indirect shareholder of the PFIC
may make the election.
Pass-through entities. A QEF election made by a domestic
partnership, S corporation, or estate is made in the
pass-through entity's capacity as a shareholder of a PFIC.
The entity will include the QEF earnings as income for the
year in which the PFIC's tax year ends. The interest holder in
the pass-through entity takes the income into account under
the rules applicable to inclusions of income from the
pass-through entity.
Affiliated groups. The common parent of an affiliated group
of corporations that joins in filing a consolidated income tax
return makes the QEF election for all members of the
affiliated group that are shareholders in the PFIC. An election
by a common parent is effective for all members of the group
Instructions for Form 8621 (Rev. 12-2024)

that own stock in the PFIC at the time the election is made or
any time thereafter.

For more information on making a retroactive election, see
Regulations section 1.1295-3.

For more information on who may make the election, see
Regulations section 1.1295-1(d).

Special Rules

When To Make the Election

For rules relating to the invalidation, termination, or
revocation of a section 1295 election, see Regulations
section 1295-1(i). Also, see Regulations section 1.1295-1(c)
(2) for rules relating to the years to which a section 1295
election applies.

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Generally, a shareholder must make the election to be
treated as a QEF by the due date, including extensions, for
filing the shareholder's income tax return for the first tax year
to which the election will apply (the “election due date”). See
Retroactive election below for exceptions. The foreign
corporation will be treated as a QEF with respect to the
shareholder for the tax year in which the election is made and
for each subsequent tax year of the foreign corporation
ending with or within a tax year of the shareholder for which
the election is effective.

Retroactive election. A shareholder may make a QEF
election for a tax year after the election due date (a
retroactive election) only if:
• The shareholder has preserved its right to make a
retroactive election under the protective statement regime
(described below), or
• The shareholder obtains the permission of the IRS to make
a retroactive election under the consent regime (described
later).
Protective statement regime. Under the protective
statement regime, a shareholder may preserve the ability to
make a retroactive election if the shareholder:
1. Reasonably believed, as of the due date for making
the QEF election, that the foreign corporation was not a PFIC
for its tax year that ended during that year (retroactive
election year);
2. Filed a Protective Statement (see below) with respect
to the foreign corporation, applicable to the retroactive
election year, in which the shareholder describes the basis
for its reasonable belief;
3. Extended, in the Protective Statement, the periods of
limitations on the assessment of taxes under the PFIC rules
for all tax years to which the protective statement applies;
and
4. Complied with the other terms and conditions of the
protective statements.
The Protective Statement must be attached to the
shareholder's tax return for the shareholder's first tax year to
which the statement will apply. For required content of the
statement and other information, see Regulations section
1.1295-3(c).
Consent regime. Under the consent regime, a
shareholder that has not satisfied the requirements of the
protective regime may request that the IRS permit a
retroactive election. The consent regime applies only if:
1. The shareholder reasonably relied on tax advice of a
competent and qualified tax professional;
2. The interest of the U.S. Government will not be
prejudiced if the consent is granted;
3. The shareholder requests consent before the PFIC
status issue is raised on audit; and
4. The shareholder satisfies the procedural requirements
under Regulations section 1.1295-3(f)(4).

Instructions for Form 8621 (Rev. 12-2024)

How To Make the Election

For the tax year in which the section 1295 election is made,
the shareholder must do the following.
1. Check box A in Part II of Form 8621.
2. Complete the applicable lines of Part III. Include the
information provided in the PFIC Annual Information
Statement, Annual Intermediary Statement, or a combined
statement (see below) received from the PFIC.
3. Attach Form 8621 to a timely filed tax return (or, if
applicable, partnership or exempt organization return).
For each subsequent tax year in which the election applies
and the corporation is treated as a QEF, the shareholder
must:
1. Complete the applicable lines of Part III, and
2. Attach Form 8621 to a timely filed tax return (or, if
applicable, a partnership or exempt organization return).

Annual Election Requirements of the PFIC or
Intermediary

PFIC Annual Information Statement. For each year of the
PFIC ending in a tax year of a shareholder to which the QEF
election applies, the PFIC must provide the shareholders with
a PFIC Annual Information Statement. The statement must
contain certain information, including:
1. The shareholder's pro rata share of the PFIC's ordinary
earnings and net capital gain for that tax year, or
2. Sufficient information to enable the shareholder to
calculate its pro rata share of the PFIC's ordinary earnings
and net capital gain for that tax year.
For other information required to be included in the PFIC
Annual Information Statement, see Regulations section
1.1295-1(g).
Annual Intermediary Statement. If the shareholder holds
stock in a PFIC through an intermediary, an Annual
Intermediary Statement may be issued in lieu of the PFIC
Annual Information Statement. For the definition of an
“intermediary,” see Regulations section 1.1295-1(j). For
details on the information that should be included in the
Annual Intermediary Statement, see Regulations section
1.1295-1(g)(3).
Combined statements. A PFIC that owns directly or
indirectly any shares of stock in one or more PFICs may
provide its shareholders with a PFIC Annual Information
Statement in which it combines its own required information
and representations with the information and representations
of any lower-tier PFIC. Similarly, an intermediary through
which a shareholder indirectly holds stock in more than one
PFIC may provide the shareholder with a combined Annual
7

Intermediary Statement. For more information, see
Regulations section 1.1295-1(g)(4).
Documentation. For all tax years subject to the section
1295 election, the shareholder must keep copies of all Forms
8621, attachments, and PFIC Annual Information Statements
or Annual Intermediary Statements. Failure to produce these
documents at the request of the IRS may result in invalidation
or termination of the section 1295 election. See Regulations
section 1.1295-1(f)(2)(ii). In rare and unusual circumstances,
the IRS will consider requests for alternative documentation
to verify the ordinary earnings and net capital gain of the
PFIC. For more information, see Regulations section
1.1295-1(g)(2).

For more information, see section 1296 and Regulations
section 1.1296-1. See sections 1296(f) and (g) and
Regulations sections 1.1296-1(e) and (h)(1)(ii) for information
regarding stock owned through certain foreign entities.

When To Make the Election
This election must be made on or before the due date
(including extensions) of the U.S. person's income tax return
for the tax year in which the stock is marked to market under
section 1296. A section 1296 election by a CFC is made by
its controlling domestic shareholders (as defined in
Regulations section 1.964-1(c)(5)). For more information, see
Regulations section 1.1296-1(h)(1)(ii). Once made, the
election applies to all subsequent tax years unless the
election is revoked or terminated pursuant to Regulations
section 1.1296-1(h)(3).

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B. Election To Extend Time for Payment of Tax
Who May Make the Election

A shareholder of a QEF may make Election B to extend the
time for payment of the tax on its share of the undistributed
earnings of the fund for the current tax year. If a U.S.
partnership is a shareholder of a QEF, the election is made at
the partner level.

Special Rules

• If this election is made, interest will be imposed on the
amount of the deferred tax. This interest must be paid on the
termination of the election (see the instructions for Part VI,
line 24, later).
• The election cannot be made for any earnings on shares
disposed of during the tax year or for a tax year that any
portion of the shareholder's pro rata share of the fund's
earnings is included in income under section 951 (relating to
CFCs).
When To Make the Election

Generally, this election must be made by the due date,
including extensions, of the shareholder's tax return for the
tax year for which the shareholder reports the income related
to the deferred tax.

How To Make the Election
Take these steps to make this election.
1. Check box B in Part II.
2. Complete lines 8a through 9c of Part III.
For more information on making Election B, see
Temporary Regulations section 1.1294-1T.
See Part VI for annual reporting requirements for
outstanding section 1294 elections.

C. Election To Mark to Market PFIC Stock
(Section 1296 Election)
Who May Make the Election
Generally, an election to mark to market PFIC stock under
section 1296 may be made by:
• A U.S. person who owns (or is treated as owning)
marketable stock (defined earlier) in a PFIC at the close of
such person's tax year, or
• A RIC that meets the requirements of section 1296(e)(2).
8

How To Make the Election

Take these steps to make this election.
1. Check box C in Part II.
2. Complete either (a) Part V to calculate the amount due
under section 1291 (when required, as generally described in
the next paragraph), or (b) Part IV to calculate the gain or loss
on the stock in all other cases.
Coordination of Election C with section 1291 for first
year of election. In general, when a shareholder makes a
mark-to-market election for PFIC stock in a year other than
the first year in which the shareholder holds stock in the PFIC
and no QEF election is in effect, the PFIC stock is treated as
sold at fair market value on the last day of the tax year for
which the election is made, and the gain is treated as an
excess distribution subject to section 1291. In addition, any
distributions made during the year with respect to the PFIC
stock are subject to section 1291. See section 1296(j) and
Regulations section 1.1296-1(i).

D. Deemed Sale Election in Connection With a
QEF Election
Who May Make the Election
This is a deemed sale election under section 1291(d)(2)(A).
This election may be made by a U.S. person that elects to
treat a PFIC as a QEF for a foreign corporation's tax year
following its first tax year as a PFIC included in the
shareholder's holding period (an unpedigreed QEF). A
shareholder making this election is deemed to have sold the
PFIC stock as of the first day of the PFIC's first tax year as a
QEF (the qualification date) for its fair market value.

Special Rules
For purposes of this election, the following apply.
• The gain from the deemed sale is taxed as an excess
distribution received on the qualification date.
• The basis of the shareholder’s PFIC stock held directly, or
the stock or other property owned directly by the shareholder
through which ownership of the PFIC is attributed to the
shareholder, is increased by the gain recognized. The
manner in which the basis adjustment is made depends on
whether the shareholder is a direct or indirect shareholder.
See Regulations section 1.1291-10(f).
Instructions for Form 8621 (Rev. 12-2024)

• Solely for purposes of applying the PFIC rules, the
shareholder's holding period of the stock begins on the
qualification date.
• The election may be made for stock on which the
shareholder will realize a loss, but that loss cannot be
recognized. In addition, there is no basis adjustment for a
loss.
• After the deemed sale, the PFIC becomes a pedigreed
QEF with respect to the shareholder.

dividend. The manner in which the basis adjustment is made
depends on whether the shareholder is a direct or indirect
shareholder. See Regulations section 1.1291-9(f).
• Solely for purposes of applying the PFIC rules, the
shareholder's holding period begins on the qualification date.

When To Make the Election

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When To Make the Election

This election must be made by the due date, including
extensions, of the shareholder's original tax return (or by filing
an amended return within 3 years of the due date of the
original return) for the tax year that includes the qualification
date.

How To Make the Election

Take these steps to make this election.
1. Check box D in Part II.
2. Enter the gain or loss on line 15f of Part V.
3. If a gain is entered, complete line 16 to report the tax
and interest due on the excess distribution.
For more information regarding making Election D, see
Regulations section 1.1291-10.

E. Deemed Dividend Election in Connection
With a QEF Election
Who May Make the Election

This is a deemed dividend election under section 1291(d)(2)
(B). This election may be made by a U.S. person that elects
to treat a PFIC that is also a CFC as a QEF for the foreign
corporation's tax year following its first tax year as a PFIC
included in the shareholder's holding period (an unpedigreed
QEF).
A shareholder making this election is treated as receiving
a dividend equal to its pro rata share of the post-1986
earnings and profits (defined below in Special Rules) of the
PFIC on the qualification date (defined under the instructions
for Election D, earlier). The deemed dividend is taxed as an
excess distribution, allocated only to the days in the
shareholder's holding period during which the foreign
corporation qualified as a PFIC. For this purpose, the
shareholder's holding period ends on the day before the
qualification date.

Special Rules
For purposes of this election, the following apply.
• The term “post-1986 earnings and profits” means the
undistributed earnings and profits of the PFIC (as of the day
before the qualification date) accumulated and not distributed
in tax years beginning after 1986 during which the foreign
corporation was a PFIC and while the shareholder held the
stock (but without regard to whether the earnings relate to a
period in which the PFIC was a CFC).
• The basis of the shareholder's PFIC stock held directly, or
the stock or other property owned directly by the shareholder
through which ownership of the PFIC is attributed to the
shareholder, is increased by the amount of the deemed
Instructions for Form 8621 (Rev. 12-2024)

This election must be made by the due date (including
extensions) of the shareholder's original tax return (or by filing
an amended return within 3 years of the due date of the
original return) for the tax year that includes the qualification
date.

How To Make the Election

Take these steps to make this election.
1. Check box E in Part II.
2. Enter the dividend on line 15e of Part V as an excess
distribution.
3. Complete line 16 to figure the tax and interest due on
the excess distribution.
Attachments. The shareholder must attach a statement to
Form 8621 that demonstrates the calculation of its pro rata
share of the post-1986 earnings and profits of the PFIC that
are treated as distributed to the shareholder on the
qualification date. The post-1986 earnings and profits may be
reduced (but not below zero) by the amount that the
shareholder satisfactorily demonstrates was previously
included in its income or in the income of another U.S.
person. The shareholder demonstrates this by including in
the statement mentioned above the following information:
• The name, address, and identifying number of the U.S.
person and the amount that was included in income;
• The tax year in which the amount was previously included
in income;
• The provision of law under which the amount was
previously included in income;
• A description of the transaction in which the shareholder
acquired the stock of the PFIC from the other U.S. person;
and
• The provision of law under which the shareholder's holding
period includes the holding period of the other U.S. person.
For more information on making Election E, see
Regulations section 1.1291-9.

F. Deemed Sale Election With Respect to a
Former PFIC or “Section 1297(e) PFIC”
Who May Make the Election
This is a deemed sale election under section 1298(b)(1) and
Regulations section 1.1297-3(b) or 1.1298-3(b). This election
may be made by:
• A U.S. person that is a shareholder of a foreign corporation
that no longer qualifies as a PFIC under either the income or
asset test of section 1297(a), or
• A U.S. shareholder (as defined in section 951(b)) that
owns stock in a foreign corporation that is a CFC and a PFIC,
but that is not treated as a PFIC with respect to the U.S.
shareholder under section 1297(d).
Such persons may elect to treat the stock of the foreign
corporation as sold for its fair market value on the last day of
9

the last tax year of the foreign corporation in which it was
treated as a PFIC (termination date) or the first day on which
the qualified portion of the shareholder’s holding period in the
section 1297(e) PFIC begins (qualification date), as
applicable.

Special Rules

which the foreign corporation qualified as a PFIC. For this
purpose, the shareholder’s holding period ends on the day
before the CFC qualification date. After the deemed dividend
election, the shareholder’s stock is not treated as stock in a
PFIC.
For purposes of this election, the following rules apply:

• The basis of the shareholder’s PFIC stock held directly, or

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• The gain from the deemed sale is taxed as an excess
distribution.
• The basis of the shareholder’s PFIC stock held directly, or
the stock or other property owned directly by the shareholder
through which ownership of the PFIC is attributed to the
shareholder, is increased by the amount of the excess
distribution taxed to the shareholder making Election F. The
manner in which the basis adjustment is made depends on
whether the shareholder is a direct or indirect shareholder.
See Regulations sections 1.1297-3(b)(5) and 1.1298-3(b)(5).
• Solely for purposes of applying the PFIC rules, the new
holding period of the stock begins on the date after the
termination date or on the qualification date, as applicable.
• Election F may be made for stock on which there would be
a loss, but the loss is not recognized.
For more information on making this election, see
Regulations sections 1.1297-3(b) (section 1297(e) PFIC) and
1.1298-3(b) (former PFIC).
When To Make the Election

This election must be made by the due date of the
shareholder’s original tax return (or by filing an amended
return within 3 years of the due date, as extended under
section 6081, of the original return) for the tax year that
includes, as appropriate, either the termination date or
qualification date. However, see Form 8621-A (and
Regulations sections 1.1297-3(e) and 1.1298-3(e)) if the
3-year period has expired.

How To Make the Election
Take these steps to make this election.
1. Check box F in Part II.
2. Enter the gain or loss on line 15f of Part V. If a gain,
complete the rest of Part V.

G. Deemed Dividend Election With Respect to a
“Section 1297(e) PFIC”
Who May Make the Election
This is a deemed dividend election under section 1298(b)(1)
and Regulations section 1.1297-3(c). This election may be
made by a shareholder that is a U.S. shareholder (as defined
in section 951(b)) of a foreign corporation that is a CFC and a
PFIC, but that is not treated as a PFIC with respect to the
U.S. shareholder under section 1297(d).

Special Rules
A shareholder making this election is treated as receiving a
dividend of its pro rata share of the post-1986 earnings and
profits (defined later in Attachments) of the section 1297(e)
PFIC on the CFC qualification date (as defined in
Regulations section 1.1297-3(d)). The deemed dividend is
taxed under section 1291 as an excess distribution, allocated
only to the days in the shareholder’s holding period during
10

the stock or other property owned directly by the shareholder
through which ownership of the PFIC is attributed to the
shareholder, is increased by the amount of the deemed
dividend. The manner in which the basis adjustment is made
depends on whether the shareholder is a direct or indirect
shareholder (as defined earlier). See Regulations section
1.1297-3(c)(6).
• Solely for purposes of applying the PFIC rules, the
shareholder’s new holding period begins on the CFC
qualification date.

When To Make the Election

Make this election by the due date of the shareholder’s
original return (or by filing an amended return within 3 years
of the due date, as extended under section 6081, of the
original return) for the tax year that includes the first day on
which the qualified portion of the shareholder’s holding
period in the PFIC begins, as determined under section
1297(d). However, see Form 8621-A (and Regulations
section 1.1297-3(e)) if the 3-year period has expired.

How To Make the Election

Take these steps to make this election.
1. Check box G in Part II.
2. Enter the excess distribution on line 15e of Part V.
3. If the excess distribution is greater than zero, complete
line 16 to figure the tax and interest due on the excess
distribution.
4. Attach to Form 8621 the information specified below.

Attachments
The shareholder must attach a statement to Form 8621 that
shows the calculation of its pro rata share of the post-1986
earnings and profits of the section 1297(e) PFIC (as defined
in Regulations section 1.1291-9(j)(2)(v)) that is treated as
distributed to the shareholder on the CFC qualification date.
• The CFC qualification date, as defined in Regulations
section 1.1297-3(d), for the Section 1297(e) PFIC.
• The beginning and ending dates of the tax year of the
shareholder in which the CFC qualification date falls (that is,
the election year).
• The shareholder’s pro rata share of the post-1986 earnings
and profits of the Section 1297(e) PFIC that is treated as
distributed to the shareholder on the CFC qualification date,
including a schedule that shows the calculation of this
amount as required under Regulations section 1.1297-3(c)(5)
(ii). In addition, if the shareholder filed a Form 5471 for the
Section 1297(e) PFIC for the election year, attach Schedule J
(Form 5471).
The post-1986 earnings and profits may be reduced (but
not below zero) by the amount that the shareholder
satisfactorily shows was previously included in its income or
in the income of another U.S. person. The shareholder shows
Instructions for Form 8621 (Rev. 12-2024)

this by including in the statement mentioned above the
following information:
• The name, address, and identifying number of the U.S.
person and the amount that was included in income.
• A description of the transaction in which the shareholder
acquired the stock of the Section 1297(e) PFIC from the
other U.S. person.
• The tax year in which the amount was previously included
in income.
• The provision of law under which the shareholder's holding
period includes the holding period of the other U.S. person.

How To Make the Election
Take these steps to make this election.
1. Check box H in Part II.
2. Enter the excess distribution on line 15e of Part V.
3. If the excess distribution is greater than zero, complete
line 16 to figure the tax and interest due on the excess
distribution.
4. Attach to Form 8621 the information specified below.

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For more information on making Election G, see
Regulations section 1.1297-3(c).

H. Deemed Dividend Election With Respect to a
Former PFIC
Who May Make the Election

This is a deemed dividend election under section 1298(b)(1)
and Regulations section 1.1298-3(c). This election may be
made by a shareholder of a foreign corporation that no longer
qualifies as a PFIC under either the income or asset test of
section 1297(a) if the foreign corporation was a CFC during
its last tax year as a PFIC.

Special Rules

A shareholder making this election is treated as receiving a
dividend of its pro rata share of the post-1986 earnings and
profits (defined later in Attachments) of the former PFIC on
the termination date (as defined in Regulations section
1.1298-3(d)). The deemed dividend is taxed under section
1291 as an excess distribution, allocated only to the days in
the shareholder’s holding period during which the foreign
corporation qualified as a PFIC. For this purpose, the
shareholder’s holding period ends on the termination date.
After the deemed dividend election, the shareholder’s stock
is not treated as stock in a PFIC.
For purposes of this election, the following rules apply:

• The basis of the shareholder’s PFIC stock held directly, or

the stock or other property owned directly by the shareholder
through which ownership of the PFIC is attributed to the
shareholder, is increased by the amount of the deemed
dividend. The manner in which the basis adjustment is made
depends on whether the shareholder is a direct or indirect
shareholder (as defined earlier). See Regulations section
1.1298-3(c)(6).
• Solely for purposes of applying the PFIC rules, the
shareholder’s new holding period begins on the day following
the termination date.

When To Make the Election
This election must be made by the due date of the
shareholder’s original return (or by filing an amended return
within 3 years of the due date, as extended under section
6081, of the original return) for the tax year that includes the
first day on which the qualified portion of the shareholder’s
holding period in the PFIC begins, as determined under
section 1297(d). However, see Form 8621-A (and
Regulations section 1.1298-3(e)) if the 3-year period has
expired.
Instructions for Form 8621 (Rev. 12-2024)

Attachments

The shareholder must attach a statement to Form 8621 that
shows the calculation of its pro rata share of the post-1986
earnings and profits of the former PFIC that is treated as
distributed to the shareholder on the termination date.
• The termination date, as defined in Regulations section
1.1298-3(d), for the former PFIC.
• The beginning and ending dates of the tax year of the
shareholder in which the termination date falls (that is, the
election year).
• The shareholder’s pro rata share of the post-1986 earnings
and profits of the former PFIC that is treated as distributed to
the shareholder on the termination date, including a schedule
that shows the calculation of this amount as required under
Regulations section 1.1298-3(c)(5)(ii). In addition, if the
shareholder filed a Form 5471 for the former PFIC for the
election year, attach Schedule J (Form 5471).
The post-1986 earnings and profits may be reduced (but
not below zero) by the amount that the shareholder
satisfactorily shows was previously included in its income or
in the income of another U.S. person. The shareholder shows
this by including in the statement mentioned above the
following information.
• The name, address, and identifying number of the U.S.
person and the amount that was included in income.
• The tax year in which the amount was previously included
in income.
• The provision of law under which the amount was
previously included in income.
• A description of the transaction in which the shareholder
acquired the stock of the former PFIC from the other U.S.
person.
• The provision of law under which the shareholder’s holding
period includes the holding period of the other U.S. person.
For more information on making Election H, see
Regulations section 1.1298-3(c).

Part III. Income From a QEF

For any tax year in which the foreign corporation is not
treated as a QEF because it is not a PFIC under section
1297(a), the shareholder is not required to complete Part III.
However, the section 1295 election is not terminated. If the
foreign corporation is treated as a PFIC in any subsequent
tax year, the original election continues to apply and the
shareholder must include in Part III its pro rata share of
ordinary earnings and net capital gain and must also comply
with the section 1295 annual reporting requirements.
All QEF shareholders complete lines 6a through 7c. If you
are making Election B, also complete lines 8a through 9c.
11

Lines 6 and 7
Lines 6a and 7a. Enter on lines 6a and 7a, respectively,
your pro rata share of the ordinary earnings and net capital
gain of the QEF. The PFIC should provide these amounts or
information that will help you determine your pro rata share.
See Annual Election Requirements of the PFIC or
Intermediary, earlier.

line 11. Subtract this deferred tax amount from the sum of
lines 7, 8, and 10, and enter the difference on line 11.
For individuals, enter this deferred tax on Form 1040 in
brackets to the left of the entry space for line 24. Subtract this
deferred tax amount from the sum of lines 22 and 23, and
enter the difference on line 24.

Part IV. Gain or (Loss) From a Section
1296 Mark-to-Market Election

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Lines 6b and 7b. Your share of the ordinary earnings and
net capital gain of the QEF is reduced by the amounts you
include in income under section 951 for the tax year with
respect to the QEF. Your share of these amounts may also be
reduced as provided in section 1293(g).

Line 6c. This amount is treated as ordinary income on your
tax return.
For a noncorporate taxpayer, include this amount as “other
income” on Schedule 1 (Form 1040), line 8z, or on the
comparable line of other noncorporate tax returns. For a
corporate taxpayer, include this amount as “other income” on
line 10 of Form 1120, or on the comparable line of other
corporate tax returns.
Line 7c. See the instructions for the Schedule D used for
your tax return. Portions of the net capital gain may have to
be reported on different lines of Schedule D, depending upon
the information provided by the QEF concerning the section
1(h) categories of net capital gains and amounts thereof,
derived by the QEF. See Regulations section 1.1293-1(a)(2)
for three options a QEF may use to report and calculate
capital gain.

Line 8

If you receive a distribution from the QEF during the current
tax year, the distribution is first treated as a distribution out of
the earnings and profits of the QEF accumulated during the
year. If the total amount distributed (line 8b) exceeds the
amount included in income (line 8a), the excess is treated as
distributed out of the most recently accumulated earnings
and profits. This amount is not taxable to you if you can
satisfactorily demonstrate that the excess was previously
included in your income or the income of another U.S.
person. This is demonstrated by attaching a statement to
Form 8621 that includes the information listed under
Attachments for Election E, earlier. If the excess has not been
previously included in your income or the income of another
U.S. person, then the excess is subject to tax according to
the rules of section 301(c).

Line 9
Line 9a. Enter the total tax on your total taxable income
(including your share of undistributed earnings of the QEF)
for the tax year (for example, from Form 1120, Schedule J,
line 11; or Form 1040, line 24).
For this purpose, “undistributed earnings” is the excess, if
any, of the amount included in gross income under section
1293(a) over the sum of the amount of any distribution and
the portion of the amount attributable to stock in the QEF that
you transferred or otherwise disposed of before the end of
the QEF's tax year.
Line 9b. Calculate your total tax as if your total taxable
income did not include your share of the undistributed
earnings of the QEF (line 8e). Enter this amount on line 9b.
Line 9c. For corporations, enter this deferred tax on Form
1120, Schedule J, in brackets to the left of the entry space for
12

A shareholder that has made a mark-to-market election
under section 1296 with respect to PFIC stock completes
lines 10a through 12 with respect to PFIC stock that the
shareholder holds at the close of its tax year, and lines 13a
through 14c, with respect to PFIC stock that it sold or
disposed of during its tax year.

As discussed earlier in Mark-to-Market Election, a
shareholder may be required to complete Part V, rather than
Part IV, in the first year in which a mark-to-market election is
made. See section 1296(j) and Regulations sections 1.12911(c)(4) and 1.1296-1(i).

Lines 10a Through 12

If the fair market value of the PFIC stock as of the close of the
tax year is more than the U.S. person's adjusted basis in the
stock, the excess is treated as ordinary income.
If the adjusted basis of the stock is more than the fair
market value as of the close of the tax year, the excess is
allowed as a deduction, but only to the extent of, the lesser
of:
1. The amount of the excess (line 10c), or
2. The Unreversed inclusions (defined below) with
respect to such stock (line 11).
This amount is treated as an ordinary loss and as a
deduction allowable in computing adjusted gross income.

Unreversed inclusions. Unreversed inclusions are the
excess of the amounts that were included in income under
the section 1296 mark-to-market rules for prior tax years over
the amounts allowed as a deduction under the section 1296
mark-to-market rules for prior tax years. See section 1296(d)
and Regulations section 1.1296-1(a)(3).
Lines 10c and 12. Corporations and individuals should
include the gain or (loss) on the “other income” line of their
tax returns. Other entities should include this amount on the
comparable line of their tax return. However, RICs, for
purposes of section 851(b), should treat amounts included in
income as a dividend.
If a CFC makes a section 1296 mark-to-market election
with respect to a PFIC in which it owns stock, any line 10c
gain is treated as foreign personal holding company income
and any line 12 loss is treated as a deduction that is allocable
to foreign personal holding company income.

Lines 13 Through 14c

Complete lines 13 through 14c if you sold or otherwise
disposed of any section 1296 stock during the tax year. For
purposes of lines 13 through 14c, “section 1296 stock” is any
stock for which the taxpayer has made a mark-to-market
election pursuant to section 1296(a), which is in effect for the
tax year and for which the coordination rule of Regulations
section 1.1296-1(i) does not apply.
Instructions for Form 8621 (Rev. 12-2024)

Line 13c. If the fair market value of the stock on the date of
sale or disposition (line 13a) is more than the U.S. person's
adjusted basis in the stock on the date of sale or disposition
(line 13b), the line 13c excess is a gain and is treated as
ordinary income. Corporations and individuals should include
the gain on the “other income” line of their tax returns. Other
entities should include this amount on the comparable line of
their tax return. However, RICs, for purposes of section
851(b), should treat this amount as a dividend.
If the adjusted basis of the stock (line 13b) is more than its
fair market value (line 13a), the excess is a loss and is
entered on line 13c as such. Furthermore, the filer must
complete lines 14a and 14b, and, if applicable, line 14c.

Line 15
Lines 15a and 15b
Enter your total distributions from the section 1291 fund with
respect to the applicable stock for the periods indicated.
Note. A 10%-or-greater domestic corporation shareholder
might be able to claim a deemed paid foreign tax credit under
section 902 with respect to a distribution from a section 1291
fund in the fund’s tax year beginning before January 1, 2018.
See Form 1118, Foreign Tax Credits—Corporations, to
calculate the taxes deemed paid and the gross-up amount.

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Line 14a. Enter any Unreversed inclusions with respect to
the stock (see definition, earlier).

Line 14b. Enter the loss from line 13c, but only to the extent
of unreversed inclusions on line 14a. This loss is treated as
ordinary loss. Corporations and individuals should include
the loss on the “other income” line of their tax returns. Other
entities should include this amount on the comparable line of
their tax return.
Line 14c. Enter the amount by which the loss on line 13c is
more than the unreversed inclusions. This amount is subject
to the rules generally applicable to losses provided
elsewhere in the Code and regulations thereunder. See
Regulations section 1.1296-1(c)(4)(ii).

Multiple dispositions. In the case of multiple dispositions,
attach a statement for each disposition using the same
format shown on lines 13 through 14c. Then:
• Enter “multiple” on lines 13a, 13b, and 14a.
• Enter your net ordinary gains on line 13c (do not enter any
net losses on line 13c).
• Enter your net ordinary losses on line 14b.
• Enter your net “other” losses on line 14c.
For more information relating to mark-to-market elections
under section 1296, see Regulations sections 1.1296-1 and
1.1296-2.

Part V. Distributions From and
Dispositions of Stock of a Section
1291 Fund

See Section 1291 Fund, earlier, for the definition of a section
1291 fund and also for a brief summary of the tax
consequences for shareholders of a section 1291 fund.
Also, see Section 1291 Fund and Mark-to-Market Election,
earlier, for a brief discussion of when a shareholder may be
subject to section 1291 in the year that it makes a markto-market election under any provision of the Code, including
section 1296.
Complete a separate Part V for each excess distribution.
That is, if you receive a distribution from a section 1291 fund
with respect to shares for which you have different holding
periods, complete lines 15a through 15e separately for each
block of shares that has the same holding period (“applicable
stock”). If you dispose of stock in a section 1291 fund for
which you have different holding periods, complete line 15f
for each block of shares that has the same holding period.

Instructions for Form 8621 (Rev. 12-2024)

Line 15a. If the holding period of the applicable stock began
in the current tax year, there is no excess distribution and you
should complete Part V as follows: Enter on line 15a the total
distributions you received from the section 1291 fund with
respect to that stock during the current tax year. If you did not
dispose of that stock during the tax year, do not complete the
rest of Part V. If you did dispose of that stock during the tax
year, skip lines 15b through 15e and complete lines 15f and
16.
If the holding period of the applicable stock began in the
current tax year, the line 15a amount is taxed according to the
rules of section 301. To the extent that section 301(c)(1) is
applicable, include the amount as a dividend on your income
tax return. For corporations, include this line 15a amount on
Form 1120, Schedule C, line 14. For individuals, include this
line 15a amount on Form 1040, line 3b (and, if applicable, on
Schedule B (Form 1040), line 5).
Line 15c. Divide the amount on line 15b by 3. If the number
of tax years in your holding period preceding the current tax
year is less than 3, divide the amount on line 15b by that
number.

Line 15e
Nonexcess distribution. The nonexcess distribution is the
lesser of line 15a or line 15d. This amount is taxed according
to the rules of section 301. To the extent that section 301(c)
(1) is applicable, include the amount as a dividend on your
income tax return. For corporations, include this amount on
Form 1120, Schedule C, line 14. For individuals, include this
amount on Form 1040, line 3b (and, if applicable, on
Schedule B (Form 1040), line 5).
Excess distributions. If you received more than one
distribution during the tax year with respect to the applicable
stock, the excess distribution is apportioned among all actual
distributions. Each apportioned amount is treated as a
separate excess distribution.
Line 15f. Gain recognized on the disposition of stock of a
section 1291 fund is treated as an excess distribution. Loss
realized on the disposition of stock of a section 1291 fund is
not taken into account under section 1291 and thus, for
example, does not reduce the amount of total gain subject to
section 1291. However, the loss may be recognized under
another provision of the Code and reported accordingly.
Stock of a section 1291 fund is considered disposed of if it is
sold, transferred, or pledged.

13

Line 16
Lines 16a and 16b
Determine the taxation of the excess distribution on a
separate sheet and attach it to Form 8621. Divide the amount
on line 15e or 15f, whichever applies, by the number of days
in your holding period. The holding period of the stock is
treated as ending on the date of the distribution or
disposition.

These taxes must be creditable under general foreign tax
credit principles, and the shareholder must choose to claim
the foreign tax credit for the current tax year.
The excess distribution taxes (the creditable foreign taxes
attributable to an excess distribution) are determined by
apportioning the total creditable foreign taxes between the
part of the distribution that is an excess distribution and the
part that is not.
The excess distribution taxes are allocated in the same
manner as the excess distribution is allocated. See Excess
distributions, earlier. Those taxes allocated to pre-PFIC tax
years and the current tax year are taken into account for the
current tax year under the general rules of the foreign tax
credit.
The excess distribution taxes allocated to a PFIC year only
reduce the increase in tax figured for that tax year (but not
below zero). No carryover of any unused excess distribution
taxes is allowed.
When you dispose of PFIC stock, the above foreign tax
credit rules apply only to the part of the gain that, without
regard to section 1291, would be treated under section 1248
as a dividend.

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Special rules apply to the holding period if:

• The deemed dividend election (Election E) is made. See

the instructions earlier for Election E.
• The mark-to-market election (Election C) is made or was
made in a prior year (see section 1291(a)(3)(A)(ii)).
• The deemed dividend election with respect to a Section
1297(e) PFIC (Election G) or with respect to a Former PFIC
(Election H) is made. See the instructions for Election G and
Election H, earlier.

Determine the amount allocable to each tax year in your
holding period by adding the amounts allocated to the days in
each such tax year. Add the amounts allocated to the
pre-PFIC and current tax years. Enter the sum on line 16b.
This amount is treated as ordinary income (for example,
individuals and corporations should enter this amount on the
“other income” line of their tax return).
Line 16c. Determine the increase in tax for each tax year in
your holding period (other than the current tax year and
pre-PFIC years). An increase in tax is determined for each
PFIC year by multiplying the part of the excess distribution
allocated to each year (as determined on line 16a) by the
highest rate of tax under section 1 or section 11, whichever
applies, in effect for that tax year. Add the increases in tax
computed for all years. Enter the aggregate increases in tax
(before credits) on line 16c.
The following table sets forth the highest rate of tax in
effect under section 1 (applicable to individuals) for calendar
years 1987 through 2024.

Tax Rates
Tax year(s) (based on calendar
year taxpayer)

Highest rate of tax in effect
under IRC section 1

2018–2024

37%

2013–2017

39.6%

2003–2012

35%

2002

38.6%

2001

39.1%

1993–2000

39.6%

1991–1992

31%

1988–1990

28%

1987

38.5%

Line 16d. To figure the foreign tax credit, the shareholder of
a section 1291 fund figures the total creditable foreign taxes
attributable to the distribution. This amount includes the
withholding taxes paid by the shareholder on the distribution
and, in the case of the tax year of a section 1291 fund that
begins before 2018, for 10%-or-greater domestic corporate
shareholders, any taxes deemed paid under section 902.
14

Line 16e. This amount is the total increase in tax and is
included on your tax return as additional taxes.
For individuals, include the amount as part of the total for
Form 1040, line 16. Check box 3 on line 16 and enter
“1291TAX” in the entry space for that box.
For corporations, enter this amount on Form 1120,
Schedule J, to the left of the entry space for line 1. Enter
“Sec. 1291” next to the amount and include it as part of the
total for line 1. Other entities should use the comparable line
on their income tax return.
Line 16f. Interest is charged on each net increase in tax for
the period beginning on the due date (without regard to
extensions) of your income tax return for the tax year to which
an increase in tax is attributable and ending with the due date
(without regard to extensions) of your income tax return for
the tax year of the excess distribution.
The amount of interest is determined by using the rates
and methods under section 6621. See section 1291(c)(3) for
more information regarding the computation of interest, and
also see Revenue Ruling 2024-18, 2024-37 I.R.B. 584 (or
successor Revenue Ruling) for a list of historical interest
rates under section 6621.
For individuals, include the interest on Schedule 2 (Form
1040), line 17p.
For corporations, include the interest as part of the total for
Form 1120, Schedule J, line 9z. See the instructions for Form
1120, Schedule J, line 9z.

Part VI. Status of Prior Year Section
1294 Elections and Termination of
Section 1294 Elections

Each person who has made a section 1294 election must (1)
complete lines 17 through 20 to annually report the status of
that election, and (2) complete lines 21 through 24 to report
the termination of any section 1294 election that occurred
during the tax year. See Temporary Regulations section
1.1294-1T(h).
Line 17. Enter the last day of each tax year for which you
made a section 1294 election that is outstanding. Enter as
Instructions for Form 8621 (Rev. 12-2024)

MM/DD/YYYY. Do not include an election made in the current
tax year.
Line 18. Enter the undistributed earnings of the QEF in the
year for which the payment of tax was extended by the
section 1294 election entered on line 17. If the election was
partially terminated in a prior year, enter the remaining
undistributed earnings.

• A change in status of the QEF will terminate all elections.

For more information, see Regulations section
1.1294-1T(e).

Line 23. Enter the deferred tax due from the termination of
the section 1294 election. The deferred tax entered on line 19
is due if the election was completely terminated. If the
election was only partially terminated, a proportionate
amount of the deferred tax is due. That amount is determined
by multiplying the amount entered on line 19 by a fraction, of
which the numerator is the amount entered on line 22 and the
denominator is the amount entered on line 18. The deferred
tax is due by the due date of the shareholder's income tax
return (without regard to extensions) for the year of
termination.
When the election is terminated, corporations include the
deferred tax as part of the total for Form 1120, Schedule J,
line 11. Also, enter the deferred tax to the left of line 11 and
label it as “Sec. 1294 deferred tax.”
For individuals, include the deferred tax as part of the total
for Schedule 2 (Form 1040), line 17z. Enter “1294DT” and the
amount of the deferred tax in the entry space for that line.

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Line 19. Enter the tax for which payment was extended by
the section 1294 election entered on line 17. If the election
was partially terminated in the previous tax year, enter the
balance of the deferred tax from line 25 of the prior year Form
8621.

Line 20. Enter the accrued interest (determined under
section 6621) on the deferred tax. This is the interest accrued
from the due date (not including extensions) of the return for
the year for which the section 1294 election was made until
the date the current year's return is filed.
Line 21. Enter the event(s) that occurred during the tax year
that terminated one or more of the section 1294 elections
reported on line 17. A section 1294 election may be
terminated voluntarily. However, an election will terminate
automatically, in whole or in part, when any of the following
events occur:
• An actual or deemed distribution of earnings to which the
election is attributable (a loan, pledge, or guarantee by the
QEF to or for the benefit of the taxpayer may cause a
deemed distribution of the earnings);
• A disposition of stock in the QEF, including a pledge by the
taxpayer of stock as security for a loan; or
• A change of status of the QEF (that is, a foreign
corporation that is no longer a QEF or PFIC).
Line 22. Enter the earnings distributed or deemed
distributed as a result of the events described on line 21.
Earnings are treated as distributed out of the most recently
accumulated earnings and profits. Accordingly, an event will
first terminate the most recently made election.
An election may be terminated in whole or in part
depending on the event causing the termination. Examples
are as follows.
• A distribution of earnings will terminate an election to the
extent the election is attributable to the earnings distributed.
• A loan, pledge, or guarantee by the QEF made directly or
indirectly to the electing shareholder or related person will
terminate an election to the extent of the undistributed
earnings equal to the amount loaned, secured, or
guaranteed.
• A disposition of stock will terminate all elections with
respect to the undistributed earnings attributable to that
stock.

Instructions for Form 8621 (Rev. 12-2024)

Line 24. Enter the interest accrued on the deferred tax.
Interest accrues beginning on the due date (without regard to
extensions) of your tax return for the tax year in which the
section 1294 election is made and ending with the due date
(without regard to extensions) of your tax return for the tax
year of the termination. Interest is computed using the rates
and methods under section 6621.
For corporations, enter the amount of section 1294
interest on Form 1120, Schedule J, line 11, and label it as
“Sec. 1294 interest.”
For individuals, include the interest from line 24 on
Schedule 2 (Form 1040), line 17q.
Lines 25 and 26. Complete lines 25 and 26 only if a section
1294 election is partially terminated. Enter on line 25 the part
of the deferred tax outstanding after the partial termination of
the section 1294 election. This amount should equal line 19
minus line 23.
Note. As indicated in the line 19 instructions, for next year,
be sure to enter the line 25 amount of this year’s Form 8621
on line 19 of next year’s Form 8621.
Enter on line 26 the accrued interest remaining after the
partial termination of the section 1294 election. This amount
should equal line 20 minus line 24.

15

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If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we
would be happy to hear from you. You can send us comments from IRS.gov/FormComments. Or you can write to the Internal
Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the
tax form to this office. Instead, see When and Where To File, earlier.

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Instructions for Form 8621 (Rev. 12-2024)