Company: XCH
Filing Date: 2025-04-23
Form Type: 20-F
Source: 0000950170-25-056976
Chunk: 166

Company: XCHG Ltd
Filing Date: 2025-04-23
Form: 20-F
Item: Item 10
Chunk 166
---
 the amount realized and the U. S. Holder’s tax basis in the ADSs or Class A ordinary shares disposed of, in each case as determined in U. S. dollars. The gain or loss will be long-term capital gain or loss if, at the time of the sale or disposition, the U. S. Holder has owned the ADSs or Class A ordinary shares for more than one year. Long-term capital gains recognized by noncorporate U. S. Holders are subject to tax rates that are lower than those applicable to ordinary income. The deductibility of capital losses is subject to limitations.

As described in “ - PRC Tax Considerations,” if we are deemed to be a “resident enterprise” under PRC tax law, any gain on the sale of ADSs or Class A ordinary shares may be subject to PRC taxes. Under the Code, capital gains of U. S. persons generally are treated as U. S.-source income. However, U. S. Holders that are eligible for the benefits of the Treaty may be able to elect to treat the gain as foreign-source income under the Treaty and claim a foreign tax credit in respect of any PRC taxes on disposition gains. Certain Treasury regulations generally preclude a U. S. Holder from claiming a foreign tax credit with respect to PRC income taxes on gains from dispositions of ADSs or Class A ordinary shares unless the U. S. Holder is eligible for the benefits of the Treaty and elects to apply them. As discussed above under “ - Taxation of Distributions,” the IRS released notices that provide relief from certain of their provisions (including the limitation described in the preceding sentence) for taxable years ending before the date that a notice or other guidance withdrawing or modifying the temporary relief is issued (or any later date specified in such notice or other guidance). However, even if these Treasury regulations do not prohibit a U. S. Holder from claiming a foreign tax credit with respect to PRC taxes on disposition gains, other limitations under the foreign tax credit rules may preclude a U. S. Holder from claiming a foreign tax credit with respect to PRC income taxes on disposition gains. If a U. S. Holder is precluded from claiming a foreign tax credit, it is possible that any PRC income taxes on disposition gains may either be deductible or reduce the amount realized on the disposition.

The rules governing foreign tax credits and deductibility of foreign taxes are complex. U. S. Holders should consult their tax advisers regarding their eligibility for the