Company: PGYWW
Filing Date: 2025-12-05
Form Type: S-3ASR
Source: 0000950103-25-015781
Chunk: 60

Company: Pagaya Technologies Ltd.
Filing Date: 2025-12-05
Form: S-3ASR
Chunk 60
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 whether or not they are Treaty-eligible, should consult their tax advisors
regarding the availability of foreign tax credits and the deductibility of foreign taxes in light of their particular circumstances.

Passive foreign investment company considerations

Definition of a PFIC

A non-U.S. corporation generally will be classified
as a passive foreign investment company (a “PFIC”) for U.S. federal income tax purposes for any taxable year if either (i)
at least 75% of its gross income in such taxable year is passive income (the “income test”) or (ii) at least 50% of its assets
in such taxable year (generally determined based on fair market value and averaged quarterly over the year) produce or are held for the
production of passive income (the “asset test”). For this purpose, a corporation generally is treated as owning its proportionate
share of the assets and earning its proportionate share of the income of any other corporation in which it owns, directly or

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indirectly, at least 25% (by value) of the stock. 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 certain passive assets. For purposes of these rules, interest income earned by a corporation is considered
to be passive income and cash held by a corporation is generally considered to be a passive asset. Goodwill and other intangibles are
generally characterized as a non-passive or passive asset based on the nature of the income produced in the activities to which the goodwill
and intangibles relate.

PFIC status of Pagaya

Legislative history of the relevant Code provisions
indicates that the total value of a publicly-traded foreign corporation’s assets generally will be treated as equal to the sum of
the aggregate value of its outstanding stock plus its liabilities for purposes of the asset test, and publicly-traded foreign corporations
often employ such a market capitalization method to value their assets. However, the IRS has not issued guidance conclusively addressing
how to value a publicly-traded foreign corporation’s assets for PFIC purposes. The trading value of our Class A Ordinary Shares
has in the past and is likely to continue to fluctuate. In particular, the market price of the shares of U.S. listed technology companies
(including us) has been especially volatile in recent years. In addition, we have a dual class share