Company: CHOW
Filing Date: 2025-02-28
Form Type: DRS/A
Source: 0001493152-25-008591
Chunk: 164

Company: ChowChow Cloud International Holdings Ltd
Filing Date: 2025-02-28
Form: DRS/A
Chunk 164
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 rate applicable to income tax deficiencies) that is added to the tax otherwise due for the taxable year in which the disposition
occurs. The tax liability for amounts allocated to years before the year of disposition or “excess distribution” cannot be
offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the Equity Shares cannot be treated
as capital, even if a U.S. Holder held such Equity Shares as capital assets. The preferential U.S. federal income tax rates for dividends
and long-term capital gain of individual U.S. Holders (as well as certain trusts and estates) would not apply, and special rates would
apply for calculating the amount of the foreign tax credit with respect to excess distributions.

If a corporation is a PFIC
for any taxable year during which a U.S. Holder holds Ordinary Shares in the corporation, then the corporation generally will continue
to be treated as a PFIC with respect to the holder’s Ordinary Shares, even if the corporation no longer satisfies either the passive
income or passive asset tests described above, unless the U.S. Holder terminates this deemed PFIC status by electing to recognize gain,
which will be taxed under the excess distribution rules as if such Ordinary Shares had been sold on the last day of the last taxable
year for which the corporation was a PFIC.

The
excess distribution rules may be avoided if a U.S. Holder makes a QEF election effective beginning with the first taxable year in the
holder’s holding period in which the corporation is a PFIC. A U.S. Holder that makes a QEF election is required to include in income
its pro rata share of the PFIC’s ordinary earnings and net capital gain as ordinary income and long-term capital gain, respectively,
subject to a separate election to defer payment of taxes, which deferral is subject to an interest charge. A U.S. Holder whose QEF election
is effective after the first taxable year during the holder’s holding period in which the corporation is a PFIC will continue to
be subject to the excess distribution rules for years beginning with such first taxable year for which the QEF election is effective.

In general, a U.S. Holder
makes a QEF election by attaching a completed IRS Form 8621 to a timely filed (taking into account any extensions) U.S. federal income
tax return for the year beginning with which the QEF election is to be effective. In certain circumstances, a U.S. Holder