Company: MKDWW
Filing Date: 2025-04-03
Form Type: 20-F
Source: 0001641172-25-002607
Chunk: 113

Company: MKDWELL Tech Inc.
Filing Date: 2025-04-03
Form: 20-F
Item: Item 10
Chunk 113
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 the disposition of passive assets.

Although
the law in this regard is unclear, we treat the VIEs as being owned by us for United States federal income tax purposes, not only because
we exercise significant influence over the operation of such entities but also because we are entitled to substantially all of their
economic benefits, and, as a result, we consolidate their results of operation in our financial statements. Assuming that we are the
owner of the VIEs for United States federal income tax purposes and based upon our historical income and assets, we do not believe that
we were classified as a PFIC for the fiscal year ended December 31, 2023. However, the application of the PFIC rules is subject to uncertainty
in several respects, and there can be no assurances that the IRS will not take a contrary position or a court will not sustain such a
challenge by the IRS.

Whether
we (or any of our subsidiaries) are or will become a PFIC for the current or any subsequent taxable year is a factual determination that
depends on, among other things, the composition of our income and assets (which may differ from our historical results and current projections)
and the market value of our securities. If we retain significant amounts of liquid assets or if our market capitalization declines, our
risk of being classified as a PFIC may substantially increase. The PFIC status is a factual determination that must be made annually
at the close of each taxable year, and, thus, we cannot assure you that we will not be a PFIC for the current or subsequent taxable years.

Although
the PFIC status will be determined annually, an initial determination that we (or any of our subsidiaries) are a PFIC will generally
apply for subsequent years to a U. S. Holder who holds our securities while we (or any of our subsidiaries) are a PFIC, whether or not
we (or such subsidiary) meet the test for PFIC status in subsequent years.

  67  

If
we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U. S. Holder of Ordinary
Shares and, in the case of Ordinary Shares, the U. S. Holder did not make an applicable PFIC election (described below), such U. S. Holder
generally would be subject to special and adverse rules with respect to (i) any gain recognized by the U. S. Holder on the sale or other
dis