Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 72

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 72
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 purpose, passive income generally
includes dividends, interest, gains from certain commodities transactions, rents, royalties and the excess of gains over losses from
the disposition of assets that produce passive income. However, rents derived in the active conduct of a trade or business and received
from an unrelated party are considered active income for these purposes. Goodwill is treated as an active asset under the PFIC rules
to the extent attributable to activities that produce active income. Cash generally is a passive asset for these purposes.

Based on the composition of our income and assets
and the trading price of our ADSs or Class A ordinary shares, we believe there is a significant risk that we were a PFIC for U. S. federal
income tax purposes for our taxable year ended September 30, 2024. Additionally, there is a significant risk that we will be a PFIC for
our current taxable year and in future taxable years. The determination of whether we are a PFIC must be made annually based on the facts
and circumstances at that time.

If we are a PFIC in any taxable year, a U. S. Holder (as defined in
“ Item 10. Additional Information - E. Taxation - United States Federal Income Tax Considerations”) may incur significantly
increased U. S. federal income tax on gain recognized on the sale or other disposition of the ADSs or Class A ordinary shares and on the
receipt of distributions on the ADSs or Class A ordinary shares to the extent such gain or distribution is treated as an “excess
distribution” under the federal income tax rules, and such U. S. Holder may be subject to burdensome reporting requirements. Further,
if we are a PFIC for any year during which a U. S. Holder holds ADSs or Class A ordinary shares, we generally will continue to be treated
as a PFIC for all subsequent years during which such U. S. Holder holds our ADSs or Class A ordinary shares unless we cease to be a PFIC
and the U. S. Holder makes a special “purging” election on U. S. Internal Revenue Service (“ IRS”) Form 8621. If
we were a PFIC in taxable year ended September 30, 2024 but cease to be a PFIC in a subsequent year, a U. S. Holder who held our Class
A ordinary shares or ADSs in any year in which we were a PFIC should consider making the “purging” election described above.
See