Company: PAVS
Filing Date: 2025-08-04
Form Type: 20-F
Source: 0001929980-25-000590
Chunk: 141

Company: Paranovus Entertainment Technology Ltd.
Filing Date: 2025-08-04
Form: 20-F
Item: Item 10
Chunk 141
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 those subsequent years, unless such U. S. Holder made a purging election as described below. A U. S. Holder who makes the QEF election discussed above for our first taxable year as a PFIC in which the U. S. Holder holds (or is deemed to hold) our shares, however, will not be subject to the PFIC tax and interest charge rules discussed above in respect to such shares. In addition, such U. S. Holder will not be subject to the QEF inclusion regime with respect to such shares for any of our taxable years that end within or with a taxable year of the U. S. Holder and in which we are not a PFIC. On the other hand, if the QEF election is not effective for each of our taxable years in which we are a PFIC and during which the U. S. Holder holds (or is deemed to hold) our shares, the PFIC rules discussed above will continue to apply to such shares unless the holder files on a timely filed U. S. income tax return (including extensions) a QEF election and a purging election to recognize under the rules of Section 1291 of the Code any gain that the U. S. Holder would otherwise recognize if the U. S. Holder had sold our shares for their fair market value on the “qualification date.” The qualification date is the first day of our tax year in which we qualify as a QEF with respect to such U. S. Holder. The purging election can only be made if such U. S. Holder held our ordinary shares on the qualification date. The gain recognized by the purging election will be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of the purging election, the U. S. Holder will increase the adjusted tax basis in its ordinary shares by the amount of the gain recognized and will also have a new holding period in the shares for purposes of the PFIC rules.

If a U. S. Holder did not make a timely “mark-to-market” election (as described above), and if we were a PFIC at any time during the period such U. S. Holder held our ordinary shares, then such ordinary shares will continue to be treated as stock of a PFIC with respect to such U. S. Holder even if we cease to be a PFIC in a future year, unless such U. S. Holder makes a “purging election” for the year we