Company: ILAG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001641172-25-006445
Chunk: 144

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 144
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 tax
basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U. S. federal income tax
principles. Therefore, a U. S. Holder should expect that a distribution will be treated as a dividend even if that distribution would otherwise
be treated as a non-taxable return of capital or as capital gain under the rules described above.

Taxation of Dispositions of Ordinary Shares

Subject to the passive foreign investment company
rules discussed below, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of a share equal to
the difference between the amount realized (in U. S. dollars) for the share and your tax basis (in U. S. dollars) in the ordinary shares.
The gain or loss will be capital gain or loss. If you are a non-corporate U. S. Holder, including an individual U. S. Holder, who has held
the ordinary shares for more than one year, you may be eligible for reduced tax rates on any such capital gains. The deductibility of
capital losses is subject to limitations.

Passive Foreign Investment Company (“ PFIC”)

A non-U. S. corporation is considered a PFIC for any
taxable year if either:

  at least 75% of its gross income for such taxable year is passive income; or                                                                                                                          
  at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production o...  

Passive income generally includes dividends, interest,
rents and royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition
of passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income
of any other corporation in which we own, directly or indirectly, at least 25% (by value) of the stock. In determining the value and composition
of our assets for purposes of the PFIC asset test, (1) the cash we hold will generally be considered to be held for the production of
passive income and (2) the value of our assets must be determined based on the market value of our ordinary shares from time to time,
which could cause the value of our non-passive assets to be less than 50% of the value of all of our assets (