Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 159

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 10
Chunk 159
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. Holder’s taxable year over the U. S. Holder’s
basis in those ADSs and (ii) the U. S. Holder will be entitled to deduct as an ordinary loss in each such year the excess of the U. S. Holder’s
basis in its ADSs over their fair market value at the end of the U. S. Holder’s taxable year, but only to the extent of the net amount
previously included in income as a result of the mark-to-market election. A U. S. Holder’s adjusted tax basis in its ADSs will be
increased by the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules. In addition,
any gain the U. S. Holder recognizes upon the sale of the U. S. Holder’s ADSs in a year in which we are a PFIC will be taxed as ordinary
income in the year of sale, and any loss the U. S. Holder recognizes upon the sale will be treated as ordinary loss, but only to the extent
of the net amount of previously included income as a result of the mark-to-market election. However, because a mark-to-market election
cannot be made for equity interests in any lower-tier PFICs of the Company, a U. S. Holder would continue to be subject to the excess distribution
rules with respect to subsidiaries of the Company that are PFICs, any distributions received by the Company from a subsidiary that is
a PFIC, and any gain recognized by the Company upon a sale of equity interest of a subsidiary that is a PFIC, even if a mark-to-market
election has been made by the U. S. Holder with respect to the ADSs. The interaction of the mark-to-market election rules and the rules
governing lower-tier PFICs is complex and uncertain, and U. S. Holders should therefore consult their own tax advisors regarding the mark-to-market
election as well as the application of the PFIC rules to their ownership of the ADSs.

ADSs will be considered to be regularly traded
(i) during the current calendar year if they are traded, other than in de minimis quantities, on at least 1/6 of the days remaining in
the quarter in which offering of the ADSs occurs, and on at least 15 days during each remaining quarter of the calendar year; and (ii)
during any other calendar year if they are traded, other than in de minimis quantities, on