Company: ILAG
Filing Date: 2025-04-28
Form Type: 20-F
Source: 0001641172-25-006445
Chunk: 145

Company: Intelligent Living Application Group Inc.
Filing Date: 2025-04-28
Form: 20-F
Item: Item 3
Chunk 145
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including the cash raised
in any offering) on any particular quarterly testing date for purposes of the asset test.

We must make a separate determination each year as
to whether we are a PFIC. Depending on the amount of cash we hold, together with any other assets held for the production of passive income,
it is possible that, for our current taxable year or for any subsequent taxable year, at least 50% of our assets may be assets held for
the production of passive income. We will make this determination following the end of any particular tax year. Although the law in this
regard is unclear, we treat our consolidated variable interest entity, as being owned by us for United States federal income tax purposes,
not only because we exercise effective control over the operation of such entity but also because we are entitled to substantially all
of their economic benefits, and, as a result, we consolidate their operating results in our consolidated financial statements. In particular,
because the value of our assets for purposes of the asset test will generally be determined based on the market price of our ordinary
shares and because cash is generally considered to be an asset held for the production of passive income, our PFIC status will depend
in large part on the market price of our ordinary shares and the amount of cash we hold. Accordingly, fluctuations in the market price
of the ordinary shares may cause us to become a PFIC. In addition, the application of the PFIC rules is subject to uncertainty in several
respects. We are under no obligation to take steps to reduce the risk of our being classified as a PFIC, and as stated above, the determination
of the value of our assets will depend upon material facts (including the market price of our ordinary shares from time to time that may
not be within our control). If we are a PFIC for any year during which you hold ordinary shares, the shares will continue to be treated
as stock in a PFIC for all succeeding years during which you hold ordinary shares. However, if we cease to be a PFIC and you did not previously
make a timely “mark-to-market” election as described below, you may avoid some of the adverse effects of the PFIC regime by
making a “purging election” (as described below) with respect to the ordinary shares.

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If we are a PFIC for your taxable year(s) during which
you hold ordinary shares, you will be subject to special tax rules with respect to any “excess distribution” that