Instructions for Form 8621

(Rev. January 2022)

(Use with the December 2018 revision of Form 8621.)

Information Return by a Shareholder of a Passive Foreign Investment Company or 

Qualified Electing Fund

Department of the Treasury

Internal Revenue Service

Section references are to the Internal Revenue 

Code unless otherwise noted.

Future Developments

For the latest information about 

developments relating to Form 8621, 

and its instructions, such as legislation 

enacted after they were published, go to 

IRS.gov/Form8621.

What’s New

New rules regarding the election to 

be treated as a Qualifying Insurance 

Corporation that a U.S. shareholder 

may apply retroactively. Final 

regulations were issued under sections 

1297 and 1298 (T.D. 9936, 86 FR 4571, 

Jan. 15, 2021, as amended by T.D. 

9936, 86 FR 13648, Mar. 10, 2021). The 

regulations under section 1297 change 

the requirements for the election of a 

U.S. person that is a shareholder of a 

foreign corporation to treat stock of a 

foreign corporation as stock of a 

qualifying insurance corporation for the 

U.S. shareholder's tax years beginning 

on or after January 14, 2021, and for 

any open tax year in which the U.S. 

shareholder chooses to apply the new 

rules beginning after December 31, 

2017, and before January 14, 2021, 

provided the U.S. shareholder 

consistently applies the final regulation's 

insurance provisions to the foreign 

corporation for which the election is 

being made (Regulations sections 

1.1297-4 and 1.1297-6) for such year 

and all subsequent years. The new rules 

(1) expand the availability of the election 

to include a U.S. person who is 

considered to own stock in the foreign 

corporation by reason of holding an 

option; (2) provide a deemed election 

for small shareholders in publicly traded 

companies (as described in Regulations 

section 1.1297-4(d)(5)(iv)); (3) no longer 

require a U.S. shareholder making the 

election to attach a copy of the 

statement from the foreign corporation 

described in Regulations section 

1.1297-4(d)(5) to the Form 8621 

attached to its federal income tax return 

for the tax year to which it relates; and 

(4) allow a U.S. shareholder to make the 

election by attaching the Form 8621 to 

its amended federal income tax return 

for the tax year to which it relates, if the 

U.S. shareholder can demonstrate that 

the reason for not filing the form with its 

original return was due to reasonable 

cause. See Election To Be Treated as a 

Qualifying Insurance Corporation for 

revised instructions that incorporate the 

changes made by the final regulations.

Additional updates to these instructions. With respect to certain amounts 

on Form 8621 that are reported on 

income tax returns, some of the 

references to Form 1040 (on pages 11 

through 14 of these instructions) have 

been updated to reflect further redesign 

of Form 1040 for tax year 2021.

The line 16f instructions were 

modified to update the Revenue Ruling 

for the rates for interest determined 

under section 6621.

Reminders

Election to be treated as a Qualifying 

Insurance Corporation. A checkbox 

was added on page 1 of Form 8621 for 

shareholders of stock of a foreign 

corporation that elect to treat such stock 

as the stock of a qualifying insurance 

corporation under section 1297(f)(2), 

which was added by section 14501 of 

the Tax Cuts and Jobs Act (TCJA). For 

more information, see Election To Be 

Treated as a Qualifying Insurance 

Corporation, later.

General Instructions

Who Must File

Qualifying Insurance 

Corporation

A U.S. person that owns stock (or holds 

an option to purchase stock) of a foreign 

corporation and elects to treat such 

stock as the stock of a qualifying 

insurance corporation under the 

alternative facts and circumstances test 

within the meaning of section 1297(f)(2) 

and Regulations section 1.1297-4(d) 

must file a limited-information Form 

8621. For details, see Election To Be 

Treated as a Qualifying Insurance 

Corporation, later.

Passive Foreign Investment 

Corporation (PFIC)

Generally, a U.S. person that is a direct 

or indirect shareholder of a PFIC must 

file Form 8621 for each tax year under 

the following five circumstances if the 

U.S. person:

1. Receives certain direct or indirect 

distributions from a PFIC,

2. Recognizes gain on a direct or 

indirect disposition of PFIC stock,

3. Is reporting information with 

respect to a Qualified Electing Fund 

(QEF) or section 1296 mark-to-market 

election,

4. Is making an election reportable 

in Part II of the form, or

5. Is required to file an annual report 

pursuant to section 1298(f). See the 

Part I instructions, later, for more 

information regarding the person that 

must file pursuant to section 1298(f).

A separate Form 8621 must be filed 

for each PFIC in which stock is held 

directly or indirectly. In the case of a 

chain of ownership, under the five 

circumstances described above, unless 

otherwise provided, if the shareholder 

owns one PFIC and through that PFIC 

owns one or more other PFICs, the 

shareholder must file a Form 8621 for 

each PFIC in the chain.

A single Form 8621 may be filed 

with respect to a PFIC to report the 

information required by section 1298(f) 

(that is, Part I), as well as to report 

information in Parts III through VI of the 

form and to make elections in Part II of 

the form. For example, a U.S. person 

that has made a section 1296 

mark-to-market election with respect to 

a PFIC will file a single Form 8621 and 

complete Part I and Part IV.

Indirect shareholder. Generally, a 

U.S. person is an indirect shareholder of 

a PFIC if it is:

• A 50%-or-more shareholder of a 

foreign corporation that is not a PFIC 

and that directly or indirectly owns stock 

of a PFIC,

Dec 16, 2021 Cat. No. 10784P
• A shareholder of a PFIC where the 

PFIC itself is a shareholder of another 

PFIC,

• A 50%-or-more shareholder of a 

domestic corporation where the 

domestic corporation owns a section 

1291 fund, or

• A direct or indirect owner of a 

pass-through entity where the 

pass-through entity itself is a direct or 

indirect shareholder of a PFIC.

For more information on determining 

whether a U.S. person is an indirect 

shareholder, see Regulations section 

1.1291-1(b)(8).

For purposes of these rules, a 

pass-through entity is a partnership, S 

corporation, trust, or estate.

However, a U.S. person that owns 

stock of a PFIC through a tax-exempt 

organization or account described in the 

list below is not treated as a shareholder 

of the PFIC.

• An organization or an account that is 

exempt from tax under section 501(a) 

because it is described in section 

501(c), 501(d), or 401(a).

• A state college or university 

described in section 511(a)(2)(B).

• A plan described in section 403(b) or 

457(b).

• An individual retirement plan or 

annuity as defined in section 7701(a)

(37).

• A qualified tuition program described 

in section 529 or 530.

• A qualified ABLE program described 

in section 529A.

Interest holder of pass-through entities. In general, the following interest 

holders must file Form 8621, unless an 

exception applies.

1. A U.S. person that is an interest 

holder of a foreign pass-through entity 

that is a direct or indirect shareholder of 

a PFIC.

2. A U.S. person that is considered 

(under sections 671 through 679) the 

shareholder of PFIC stock held in trust.

3. A U.S. partnership, S corporation, 

U.S. trust (other than a trust that is 

subject to sections 671 through 679 for 

the PFIC stock), or U.S. estate that is a 

direct or indirect shareholder of a PFIC.

Note. U.S. persons that are interest 

holders of pass-through entities 

described in 3 above must file Form 

8621 if the pass-through entity fails to 

file such form or the U.S. person is 

required to recognize any income under 

section 1291.

When and Where To File

Attach Form 8621 to the shareholder's 

tax return (or, if applicable, partnership 

or exempt organization return) and file 

both by the due date, including 

extensions, of the return at the Internal 

Revenue Service Center where the tax 

return is required to be filed.

If you are not required to file an 

income tax return or other return for the 

tax year, file Form 8621 directly with the 

Internal Revenue Service Center, 

Ogden, UT 84201-0201.

Definitions and Special 

Rules

Passive Foreign Investment 

Company (PFIC)

A foreign corporation is a PFIC if it 

meets either the income or asset test 

described next.

1. Income test. 75% or more of the 

corporation's gross income for its tax 

year is passive income (as defined in 

section 1297(b)).

2. Asset test. At least 50% of the 

average percentage of assets 

(determined under section 1297(e)) 

held by the foreign corporation during 

the tax year are assets that produce 

passive income or that are held for the 

production of passive income.

Basis for measuring assets. When 

determining PFIC status using the asset 

test, a foreign corporation may use 

adjusted basis if:

1. The corporation is not publicly 

traded for the tax year; and

2. The corporation (a) is a controlled 

foreign corporation within the meaning 

of section 957 (CFC), or (b) makes an 

election to use adjusted basis.

Publicly traded corporations must 

use fair market value when determining 

PFIC status using the asset test.

Look-thru rule. When determining if a 

foreign corporation is a PFIC, the 

foreign corporation is treated as if it 

directly held its proportionate share of 

the assets and directly received its 

proportionate share of the income of 

any corporation in which it owns at least 

25% of the stock (by value).

CFC overlap rule. A 10% or more U.S. 

shareholder (defined in section 951(b)) 

that includes in income its pro rata share 

of subpart F income for stock of a CFC 

that is also a PFIC will not generally be 

subject to the PFIC provisions for the 

same stock during the qualified portion 

of the shareholder's holding period of 

the stock in the PFIC. This exception 

does not apply to option holders. For 

more information, see section 1297(d).

Note. The attribution rules of section 

1298(a)(2)(B) will continue to apply 

even if the foreign corporation is not 

treated as a PFIC with respect to the 

shareholder under section 1297(d).

Qualified Electing Fund (QEF) 

Election

A PFIC is a QEF if a U.S. person who is 

a direct or indirect shareholder of the 

PFIC elects (under section 1295(b)) to 

treat the PFIC as a QEF and complies 

with the requirements described in 

section 1295(a)(2). See the instructions 

for Election A, later, for information on 

making this election.

Tax Consequences for 

Shareholders of a QEF

• A shareholder of a QEF must 

annually include in gross income as 

ordinary income its pro rata share of the 

ordinary earnings of the QEF and as 

long-term capital gain its pro rata share 

of the net capital gain of the QEF.

• The shareholder may elect to extend 

the time for payment of tax on its share 

of the undistributed earnings of the QEF 

(Election B) until the QEF election is 

terminated.

• If the QEF election is not made with 

respect to the first year of the 

shareholder’s holding period in the 

PFIC, the shareholder may be able to 

make a deemed sale election (Election 

D) or deemed dividend election 

(Election E) (if eligible). If the 

shareholder properly makes a deemed 

sale election or deemed dividend 

election in connection with its QEF 

election, then the PFIC will become a 

pedigreed QEF (as defined in 

Regulations section 1.1291-9(j)(2)(ii)) 

with respect to the shareholder.

Note. A shareholder that receives a 

distribution from an unpedigreed QEF 

(defined in Regulations section 

1.1291-9(j)(2)(iii)) is also subject to the 

rules applicable to a shareholder of a 

section 1291 fund, later.

Basis adjustments. A shareholder's 

basis in the stock of a QEF, or in any 

property through which the shareholder 

is treated as owning stock of a QEF, is 

increased by the earnings included in 

gross income and decreased by a 

distribution from the QEF to the extent 

of previously taxed amounts.

-2- Instructions for Form 8621 (Rev. 01-2022)
Section 1291 Fund

A PFIC is a section 1291 fund if:

1. The shareholder did not elect to 

treat the PFIC as a QEF or make a 

mark-to-market election with respect to 

the PFIC, or

2. The PFIC is an unpedigreed QEF 

(as defined in Regulations section 

1.1291-9(j)(2)(iii)).

Tax Consequences for 

Shareholders of a Section 1291 

Fund

Shareholders of a section 1291 fund are 

subject to special rules when they 

receive an excess distribution (defined 

below) from, or recognize gain on the 

sale or disposition of the stock of, a 

section 1291 fund. A distribution may be 

partly or wholly an excess distribution. 

The entire amount of gain from the 

disposition of a section 1291 fund is 

treated as an excess distribution.

Excess distributions. An excess 

distribution is the part of the distribution 

received from a section 1291 fund in the 

current tax year that is greater than 

125% of the average distributions 

received in respect of such stock by the 

shareholder during the 3 preceding tax 

years (or, if shorter, the portion of the 

shareholder's holding period before the 

current tax year). No part of a 

distribution received or deemed 

received during the first tax year of the 

shareholder's holding period of the 

stock will be treated as an excess 

distribution.

The excess distribution is determined 

on a per share basis and is allocated to 

each day in the shareholder's holding 

period of the stock. See section 1291(b)

(3) for adjustments that are made when 

determining if a distribution is an excess 

distribution.

Portions of an excess distribution are 

treated differently. The portions 

allocated to the days in the current tax 

year and the shareholder's tax years in 

its holding period before the foreign 

corporation qualified as a PFIC 

(pre-PFIC years) are taxed as ordinary 

income. The portions allocated to the 

days in the shareholder's tax years 

(other than the current tax year) in its 

holding period when the foreign 

corporation was a PFIC are not included 

in income, but are subject to the 

separate tax and interest charge set 

forth in section 1291(c).

See the instructions for Part V, later.

Exempt organizations. If a 

shareholder of a PFIC is a tax-exempt 

organization, the rules of section 1291 

will apply only if a dividend from the 

PFIC would be taxable to the 

shareholder under subchapter F.

Coordination of mark-to-market regimes with section 1291. 

Shareholders of a PFIC that is marked 

to market under section 1296 or any 

other Code provision may be subject to 

section 1291 in the first tax year in 

which the shareholder marks to market 

the PFIC stock. See Regulations 

sections 1.1291-1(c)(4) and 1.1296-1(i).

Mark-to-Market Election

A U.S. shareholder of a PFIC may elect 

to mark to market the PFIC stock under 

section 1296 if the stock is “marketable 

stock.” See the instructions for Election 

C, later, for information on making this 

election.

Marketable stock. Marketable stock 

is:

• PFIC stock that is regularly traded (as 

defined in Regulations section 

1.1296-2(b)) on:

1. A national securities exchange 

that is registered with the Securities and 

Exchange Commission (SEC),

2. The national market system 

established under section 11A of the 

Securities Exchange Act of 1934, or

3. A foreign securities exchange 

that is regulated or supervised by a 

governmental authority of the country in 

which the market is located and has the 

characteristics described in Regulations 

section 1.1296-2(c)(1)(ii).

• Stock in certain PFICs described in 

Regulations section 1.1296-2(d).

For additional information, including 

special rules for regulated investment 

companies (RICs) that own PFIC stock, 

see Regulations section 1.1296-1 and 

1.1296-2.

Tax Consequences

After a PFIC shareholder elects to mark 

the stock to market under section 1296, 

the shareholder either:

1. Includes in income each year an 

amount equal to the excess, if any, of 

the fair market value of the PFIC stock 

as of the close of the tax year over the 

shareholder's adjusted basis in such 

stock; or

2. Is allowed a deduction equal to 

the lesser of:

a. The excess, if any, of the 

adjusted basis of the PFIC stock over its 

fair market value as of the close of the 

tax year; or

b. The excess, if any, of the amount 

of mark-to-market gain included in the 

gross income of the PFIC shareholder 

for prior tax years over the amount 

allowed such PFIC shareholder as a 

deduction for a loss with respect to such 

stock for prior tax years.

See the instructions for Part II, 

Election C, and Part IV, later, for more 

information, including special rules that 

may apply in the year that a mark-tomarket election is made.

Basis adjustment. If the stock is held 

directly, the shareholder's adjusted 

basis in the PFIC stock is increased by 

the amount included in income and 

decreased by any deductions allowed. If 

the stock is owned indirectly through 

foreign entities, see Regulations section 

1.1296-1(d)(2).

Additional Information 

Required

Reportable transaction disclosure 

statement. A 10% shareholder (by 

vote or value) of a QEF may also be 

required to file Form 8886 if the QEF is 

considered to have participated in a 

reportable transaction pursuant to 

Regulations section 1.6011-4(c)(3)(i)

(G). See Form 8886, Reportable 

Transaction Disclosure Statement, and 

Regulations section 1.6011-4 for 

additional information.

Specific Instructions

Important: All line references to Form 

1120 and Form 1040 are to the 2021 

forms. Other entities should use the 

comparable line on their tax return.

Excepted Specified 

Foreign Financial Assets 

Reported

Check this box only if the Form 8621 

filer also files Form 8938, Statement of 

Specified Foreign Financial Assets, for 

the tax year and includes this form in the 

total number of Forms 8621 reported on 

line 4 of Part IV, Excepted Specified 

Foreign Financial Assets, of Form 8938. 

For more information, see the 

Instructions for Form 8938, generally, 

and in particular, Duplicative Reporting 

and the specific instructions for Part IV, 

Excepted Specified Foreign Financial 

Assets.

Instructions for Form 8621 (Rev. 01-2022) -3-
Election To Be Treated as 

a Qualifying Insurance 

Corporation

Who may make the election. A U.S. 

person that is a shareholder (or holds an 

option to purchase stock) of a 

corporation that fails to qualify as a 

qualifying insurance corporation (QIC) 

(as defined in section 1297(f)(1)) solely 

because its applicable insurance 

liabilities make up 25% or less of its total 

assets may elect to treat the stock as 

stock of a qualifying insurance 

corporation under the alternative facts 

and circumstances test set forth in 

section 1297(f)(2) and Regulations 

section 1.1297-4(d) if:

1. The foreign corporation’s 

applicable insurance liabilities make up 

at least 10% of its total assets; and

2. Based on the applicable facts 

and circumstances, the foreign 

corporation is predominantly engaged in 

an insurance business, and its failure to 

satisfy the 25% threshold is due solely 

to runoff-related or rating-related 

circumstances involving such insurance 

business.

The U.S. shareholder may make the 

election under section 1297(f)(2) for its 

tax year if:

• The foreign corporation directly 

provides the U.S. shareholder a 

statement, signed by a responsible 

officer of the foreign corporation or an 

authorized representative of the foreign 

corporation, that the foreign corporation 

satisfied the requirements of section 

1297(f)(2) and Regulations section 

1.1297-4(d)(1) during the foreign 

corporation's applicable reporting period 

(as defined in Regulations section 

1.1297-4(f)(4)). Specifically, if the 

foreign corporation failed to qualify as a 

QIC under section 1297(f)(1) solely 

because the ratio of applicable 

insurance liabilities to total assets for 

the tax year is 25% or less, the 

statement must (1) indicate that the ratio 

was at least 10%, along with a 

calculation of the ratio (with the resultant 

ratio double underlined); (2) include a 

statement indicating whether the failure 

to satisfy the 25% test was the result of 

runoff-related or rating-related 

circumstances, along with a brief 

description of those circumstances; and 

(3) include information that establishes 

that the foreign corporation has met the 

“predominantly engaged in an insurance 

business” requirement described in 

Regulations section 1.1297-4(d)(2).

• The foreign corporation (or its foreign 

parent corporation on its behalf) makes 

a publicly available statement (such as 

in a public filing, disclosure statement, 

or other notice provided to U.S. persons 

that are shareholders of the foreign 

corporation) that it satisfied the 

requirements of section 1297(f)(2) and 

Regulations section 1.1297-4(d)(1) 

during the foreign corporation's 

applicable reporting period (as defined 

in Regulations section 1.1297-4(f)(4)). 

This publicly available statement must 

include the same three items noted in 

the first bulleted item above. However, a 

U.S. shareholder may not rely upon the 

foreign corporation’s statement 

described in this bullet if the U.S. person 

knows or has reason to know based 

upon reasonably accessible information 

that the statement was incorrect.

Note. The final regulations do not 

require the U.S. person to attach a copy 

of either of the above statements to 

Form 8621. See Regulations section 

1.1297-4(d)(5).

When to make the election. 

Generally, the U.S. shareholder must 

make this election by the due date, 

including extensions, of the U.S. 

person’s tax return for the tax year for 

which the taxpayer is relying on the 

alternative facts and circumstances test 

within the meaning of section 1297(f)(2) 

and Regulations section 1.1297-4(d) to 

meet the definition of a qualifying 

insurance corporation. A U.S. person 

can attach the Form 8621 to an 

amended return for the tax year of the 

U.S. person to which the election relates 

if the U.S. person can demonstrate that 

the reason for not filing the form with its 

original return was due to reasonable 

cause.

How to make the election. Follow 

these steps to make the election.

1. Check the box on page 1 of Form 

8621.

2. Provide the identifying 

information for the U.S. person and the 

foreign corporation (Name, Address, 

Identifying Number (if any)) only. You do 

not have to complete any other part of 

the Form 8621 if you are only filing the 

form to make this election.

Deemed election for publicly 

traded companies. A U.S. person who 

owns publicly traded stock in a foreign 

corporation will be deemed to make the 

election under section 1297(f)(2) with 

respect to the foreign corporation and 

its subsidiaries if the following 

requirements are satisfied.

• The stock of the foreign corporation 

that is owned by the U.S. person 

(including stock owned indirectly) has a 

value of $25,000 or less ($50,000 or 

less in the case of a joint return) on the 

last day of the U.S. person's tax year 

and on any day during the tax year on 

which the U.S. person disposes of stock 

of the foreign corporation; and

• If the U.S. person owns stock of the 

foreign corporation indirectly through a 

domestic partnership, domestic trust, 

domestic estate, or S corporation (a 

domestic pass-through entity), the stock 

of the foreign corporation that is owned 

by the domestic pass-through entity has 

a value of $25,000 or less on the last 

day of the tax year of the domestic 

pass-through entity that ends with or 

within the U.S. person's tax year and on 

any day during the tax year of the 

domestic pass-through entity on which it 

disposes of stock of the foreign 

corporation.

For these purposes, stock is publicly 

traded if it would be treated as 

marketable stock within the meaning of 

section 1296(e) and Regulations 

section 1.1296-2 (without regard to 

Regulations section 1.1296-2(d)) if the 

election under section 1297(f)(2) is not 

made.

Address and Identifying 

Number

Address. Include the suite, room, or 

other unit number after the street 

address. If the post office does not 

deliver mail to the street address and 

the shareholder has a P.O. box, enter 

the box number instead.

Identifying number. Individuals 

should enter a social security number or 

a taxpayer identification number issued 

by the IRS. All other entities should 

enter an employer identification number 

(EIN).

Reference ID number. A reference ID 

number is required in the applicable 

entry space above Part I of the form only 

in cases where no EIN was entered for 

the PFIC, QEF, or QIC. However, filers 

are permitted to enter both an EIN and a 

reference ID number. If applicable, enter 

the reference ID number (defined 

below) you have assigned to the PFIC, 

QEF, or QIC.

A “reference ID number” is a number 

established by or on behalf of the U.S. 

person identified at the top of page 1 of 

the form that is assigned to a PFIC, 

QEF, or QIC with respect to which Form 

8621 reporting is required. These 

numbers are used to uniquely identify 

the PFIC, QEF, or QIC in order to keep 

track of the entity from tax year to tax 

-4- Instructions for Form 8621 (Rev. 01-2022)
year. The reference ID number must 

meet the requirements set forth below.

Note. Because reference ID numbers 

are established by or on the behalf of a 

U.S. person filing Form 8621, there is no 

need to apply to the IRS to request a 

reference ID number or for permission 

to use these numbers.

Note. In general, the reference ID 

number assigned to a PFIC, QEF, or 

QIC on Form 8621 has relevance only 

to Form 8621 and should not be used 

with respect to the PFIC, QEF, or QIC 

on other IRS forms.

Requirements. The reference ID 

number must be alphanumeric (defined 

below), and no special characters or 

spaces are permitted. The length of a 

given reference ID number is limited to 

50 characters.

For these purposes, the term 

“alphanumeric” means the entry can be 

alphabetical, numeric, or any 

combination of the two.

The same reference ID number must 

be used consistently from tax year to tax 

year with respect to a given PFIC, QEF, 

or QIC. If for any reason a reference ID 

number falls out of use (for example, the 

PFIC, QEF, or QIC no longer exists due 

to disposition or liquidation), the 

reference ID number used for that PFIC, 

QEF, or QIC cannot be used again for 

another PFIC, QEF, or QIC for purposes 

of Form 8621 reporting.

There are some situations that 

warrant correlation of a new reference 

ID number with a previous reference ID 

number when assigning a new 

reference ID number to a PFIC, QEF, or 

QIC. For example:

• In the case of a merger or acquisition, 

a Form 8621 filer must use a reference 

ID number that correlates the previous 

reference ID number with the new 

reference ID number assigned to the 

PFIC, QEF, or QIC.

• In the case of an entity classification 

election that is made on behalf of a 

PFIC, QEF, or QIC on Form 8832, 

Regulations section 301.6109-1(b)(2)(v) 

requires the PFIC, QEF, or QIC to have 

an EIN for this election. For the first year 

that Form 8621 is filed after an entity 

classification election is made on behalf 

of the PFIC, QEF, or QIC on Form 8832, 

the new EIN must be entered in the 

applicable entry space above Part I of 

Form 8621 and the old reference ID 

number must be entered in the 

applicable entry space just below. In 

subsequent years, the Form 8621 filer 

may continue to enter both the EIN and 

the reference ID number, but must enter 

at least the EIN.

You must correlate the reference ID 

numbers as follows: New reference ID 

number [space] Old reference ID 

number. If there is more than one old 

reference ID number, you must enter a 

space between each such number. As 

indicated above, the length of a given 

reference ID number is limited to 50 

characters and each number must be 

alphanumeric and no special characters 

are permitted.

Note. This correlation requirement 

applies only to the first year the new 

reference ID number is used.

Part I. Summary of Annual 

Information

Who Must Complete Part I

In general, all shareholders required to 

file Form 8621 under section 1298(f) 

and the regulations thereunder must 

complete Part I. However, a shareholder 

of a PFIC that is marked to market 

under a Code provision other than 

section 1296 (such as section 475) is 

not required to complete Part I unless it 

is subject to section 1291 with respect 

to the PFIC pursuant to Regulations 

section 1.1291-1(c)(4)(ii). See T.D. 

9806.

Shareholders filing a joint return may 

file a single Form 8621 with respect to a 

single PFIC in which each joint filer 

owns an interest.

Shareholders that are the first U.S. 

person in the chain of ownership. 

Regulations section 1.1298-1 generally 

requires a U.S. person that is at the 

lowest tier in a chain of ownership (that 

is, the first U.S. person in the chain of 

ownership) and that is a shareholder 

(including an indirect shareholder) of a 

PFIC to complete Part I for each PFIC 

owned by that shareholder during the 

shareholder’s tax year.

Specific filing requirements apply 

with respect to domestic grantor trusts, 

as described further in these 

Instructions.

Exceptions to these filing 

requirements are described below 

under Exceptions to Filing Part I.

Shareholders that are not the first 

U.S. person in the chain of ownership. In general, an indirect 

shareholder that is not the first U.S. 

person in the chain of ownership is not 

required to complete Part I unless the 

indirect shareholder:

• Is treated as receiving an excess 

distribution from the PFIC;

• Is treated as recognizing gain that is 

treated as an excess distribution as a 

result of a disposition of the PFIC;

• Is required to include an amount in 

income under section 1293(a) with 

respect to the PFIC, unless another 

shareholder through which the indirect 

shareholder owns the PFIC files under 

section 1298(f) with respect to the PFIC 

and no other exception applies;

• Is required to include an amount in 

income under section 1296(a) with 

respect to the PFIC, unless another 

shareholder through which the indirect 

shareholder owns the PFIC files under 

section 1298(f) with respect to the PFIC; 

or

• Is required to report the status of a 

section 1294 election with respect to the 

PFIC.

See Regulations section 1.1298-1(b)

(2) for further information.

Domestic grantor trusts. In general, 

a U.S. grantor of a domestic grantor 

trust that owns an interest in a PFIC 

(directly or indirectly) through one or 

more foreign entities must complete 

Part I with respect to that PFIC interest. 

See Regulations sections 1.1291-1(b)

(8)(iii)(D) and 1.1298-1(b)(1)(iii). In 

those circumstances, a domestic 

grantor trust is not required to complete 

Part I with respect to the stock of the 

PFIC that is owned by the grantor. For 

certain exceptions, see Regulations 

section 1.1298-1(b)(3)(i).

Exceptions to Filing Part I

A shareholder is exempt from 

completing Part I if it meets one of the 

exceptions described below.

Special rules for estates and trusts. 

Certain U.S. grantors and beneficiaries 

of estates and trusts may qualify for an 

exception to filing Part I.

• A U.S. grantor of a domestic grantor 

trust is not required to complete Part I if 

the trust is a domestic liquidating trust or 

a widely held fixed investment trust, as 

described in Regulations section 

1.1298-1(b)(3)(i). In these 

circumstances, the domestic grantor 

trust is required to complete Part I.

• In certain situations, a shareholder 

who is a member or beneficiary of (or 

participant in) an arrangement treated 

as a foreign pension fund under a U.S. 

income tax treaty that owns an interest 

in a PFIC is not required to complete 

Part I with respect to the PFIC. See 

Regulations section 1.1298-1(c)(4).

• A U.S. beneficiary of a foreign 

nongrantor trust or foreign estate is not 

Instructions for Form 8621 (Rev. 01-2022) -5-
required to complete Part I with respect 

to the stock of the PFIC that is owned by 

the trust or estate unless it has made a 

QEF or section 1296 mark-to-market 

election, received an excess 

distribution, or recognized gain treated 

as an excess distribution with respect to 

the stock of the PFIC. See Regulations 

section 1.1298-1(b)(3)(ii).

Exempt organizations. In general, if 

a shareholder of a PFIC is a tax-exempt 

organization, the shareholder is 

required to complete Part I only if 

income derived with respect to the PFIC 

stock would be taxable to the 

shareholder under subchapter F. See 

Regulations section 1.1298-1(c)(1).

Exception if aggregate value of 

shareholder’s PFIC stock is $25,000 

or less. A shareholder is not required 

to complete Part I with respect to a 

specific section 1291 fund if the 

shareholder meets the $25,000 

exception on the last day of the 

shareholder’s tax year and the 

shareholder does not receive an excess 

distribution from, or recognize gain on 

the sale or disposition of the stock of, 

the section 1291 fund. For purposes of 

determining whether a shareholder 

satisfies the $25,000 threshold, the 

shareholder takes into account all PFIC 

stock (QEFs, section 1291 funds, and 

PFIC stock subject to a section 1296 

mark-to-market election) owned directly 

or indirectly other than PFIC stock 

owned through another U.S. person or 

PFIC stock owned through another 

PFIC. Shareholders filing a joint return 

have a combined threshold of $50,000 

instead of $25,000 for purposes of this 

exception.

For more information, see 

Regulations section 1.1298-1(c)(2).

Exception if the value of shareholder’s indirect PFIC stock is $5,000 or 

less. A shareholder is not required to 

complete Part I with respect to indirect 

ownership of a specific section 1291 

fund if the shareholder meets the 

$5,000 exception with respect to the 

section 1291 fund on the last day of the 

shareholder’s tax year and the 

shareholder does not receive an excess 

distribution from, or recognize gain on 

the sale or disposition of the stock of, 

the section 1291 fund. For purposes of 

determining whether a shareholder 

satisfies the $5,000 threshold, the 

shareholder takes into account only the 

value of the shareholder’s proportionate 

share of the section 1291 fund.

For more information, see 

Regulations section 1.1298-1(c)(2).

Line Instructions

Line 1. Describe each class of shares 

held by the shareholder.

Line 2. Provide the date during the tax 

year that the shares were acquired, if 

applicable.

Line 3. List the number of shares held 

at the end of the tax year.

Line 4. Indicate the value of the shares 

held at the end of the tax year. 

Shareholders may rely upon periodic 

account statements provided at least 

annually to determine the value of a 

PFIC unless the shareholder has actual 

knowledge or reason to know based on 

readily accessible information that the 

statements do not reflect a reasonable 

estimate of the PFIC’s value.

Line 5. Indicate the type of PFIC and 

the amount of any excess distribution or 

gain treated as an excess distribution 

under section 1291, inclusion under 

section 1293, and inclusion or 

deduction under section 1296.

Note. In cases in which a shareholder’s 

ownership interest in a PFIC is not 

denominated in shares, the shareholder 

must provide the information for lines 1 

through 4 based on its form of 

ownership in the PFIC.

Part II. Elections

A. Election To Treat the PFIC as 

a QEF (Section 1295 Election)

Who May Make the Election

Generally, a U.S. person that owns 

stock in a PFIC, directly or indirectly, 

may make Election A to treat the PFIC 

as a QEF.

Note. A separate election must be 

made for each PFIC that the 

shareholder wants to treat as a QEF.

Exception. A tax-exempt organization 

that is not taxable under section 1291 

may not make the election. In addition, a 

tax-exempt organization that is not 

taxable under section 1291 is not 

subject to a QEF election made by a 

pass-through entity.

Chain of ownership. In a chain of 

ownership, only the first U.S. person 

that is a direct or indirect shareholder of 

the PFIC may make the election.

Pass-through entities. A QEF 

election made by a domestic 

partnership, S corporation, or estate is 

made in the pass-through entity's 

capacity as a shareholder of a PFIC. 

The entity will include the QEF earnings 

as income for the year in which the 

PFIC's tax year ends. The interest 

holder in the pass-through entity takes 

the income into account under the rules 

applicable to inclusions of income from 

the pass-through entity.

Affiliated groups. The common parent 

of an affiliated group of corporations that 

joins in filing a consolidated income tax 

return makes the QEF election for all 

members of the affiliated group that are 

shareholders in the PFIC. An election by 

a common parent is effective for all 

members of the group that own stock in 

the PFIC at the time the election is 

made or any time thereafter.

For more information on who may 

make the election, see Regulations 

section 1.1295-1(d).

When To Make the Election

Generally, a shareholder must make the 

election to be treated as a QEF by the 

due date, including extensions, for filing 

the shareholder's income tax return for 

the first tax year to which the election 

will apply (the “election due date”). See 

Retroactive election below for 

exceptions. The foreign corporation will 

be treated as a QEF with respect to the 

shareholder for the tax year in which the 

election is made and for each 

subsequent tax year of the foreign 

corporation ending with or within a tax 

year of the shareholder for which the 

election is effective.

Retroactive election. A shareholder 

may make a QEF election for a tax year 

after the election due date (a retroactive 

election) only if:

• The shareholder has preserved its 

right to make a retroactive election 

under the protective statement regime 

(described below), or

• The shareholder obtains the 

permission of the IRS to make a 

retroactive election under the consent 

regime (described later).

Protective statement regime. 

Under the protective statement regime, 

a shareholder may preserve the ability 

to make a retroactive election if the 

shareholder:

1. Reasonably believed, as of the 

due date for making the QEF election, 

that the foreign corporation was not a 

PFIC for its tax year that ended during 

that year (retroactive election year);

2. Filed a Protective Statement (see 

below) with respect to the foreign 

corporation, applicable to the retroactive 

election year, in which the shareholder 

-6- Instructions for Form 8621 (Rev. 01-2022)
describes the basis for its reasonable 

belief;

3. Extended, in the Protective 

Statement, the periods of limitations on 

the assessment of taxes under the PFIC 

rules for all tax years to which the 

protective statement applies; and

4. Complied with the other terms 

and conditions of the protective 

statements.

The Protective Statement must be 

attached to the shareholder's tax return 

for the shareholder's first tax year to 

which the statement will apply. For 

required content of the statement and 

other information, see Regulations 

section 1.1295-3(c).

Consent regime. Under the 

consent regime, a shareholder that has 

not satisfied the requirements of the 

protective regime may request that the 

IRS permit a retroactive election. The 

consent regime applies only if:

1. The shareholder reasonably 

relied on tax advice of a competent and 

qualified tax professional;

2. The interest of the U.S. 

Government will not be prejudiced if the 

consent is granted;

3. The shareholder requests 

consent before the PFIC status issue is 

raised on audit; and

4. The shareholder satisfies the 

procedural requirements under 

Regulations section 1.1295-3(f)(4).

For more information on making a 

retroactive election, see Regulations 

section 1.1295-3.

Special Rules

For rules relating to the invalidation, 

termination, or revocation of a section 

1295 election, see Regulations section 

1295-1(i). Also, see Regulations section 

1.1295-1(c)(2) for rules relating to the 

years to which a section 1295 election 

applies.

How To Make the Election

For the tax year in which the section 

1295 election is made, the shareholder 

must do the following.

1. Check box A in Part II of Form 

8621.

2. Complete the applicable lines of 

Part III. Include the information provided 

in the PFIC Annual Information 

Statement, Annual Intermediary 

Statement, or a combined statement 

(see below) received from the PFIC.

3. Attach Form 8621 to a timely filed 

tax return (or, if applicable, partnership 

or exempt organization return).

For each subsequent tax year in 

which the election applies and the 

corporation is treated as a QEF, the 

shareholder must:

1. Complete the applicable lines of 

Part III, and

2. Attach Form 8621 to a timely filed 

tax return (or, if applicable, a 

partnership or exempt organization 

return).

Annual Election Requirements of 

the PFIC or Intermediary

PFIC Annual Information Statement. 

For each year of the PFIC ending in a 

tax year of a shareholder to which the 

QEF election applies, the PFIC must 

provide the shareholders with a PFIC 

Annual Information Statement. The 

statement must contain certain 

information, including:

1. The shareholder's pro rata share 

of the PFIC's ordinary earnings and net 

capital gain for that tax year, or

2. Sufficient information to enable 

the shareholder to calculate its pro rata 

share of the PFIC's ordinary earnings 

and net capital gain for that tax year.

For other information required to be 

included in the PFIC Annual Information 

Statement, see Regulations section 

1.1295-1(g).

Annual Intermediary Statement. If 

the shareholder holds stock in a PFIC 

through an intermediary, an Annual 

Intermediary Statement may be issued 

in lieu of the PFIC Annual Information 

Statement. For the definition of an 

“intermediary,” see Regulations section 

1.1295-1(j). For details on the 

information that should be included in 

the Annual Intermediary Statement, see 

Regulations section 1.1295-1(g)(3).

Combined statements. A PFIC that 

owns directly or indirectly any shares of 

stock in one or more PFICs may provide 

its shareholders with a PFIC Annual 

Information Statement in which it 

combines its own required information 

and representations with the information 

and representations of any lower-tier 

PFIC. Similarly, an intermediary through 

which a shareholder indirectly holds 

stock in more than one PFIC may 

provide the shareholder with a 

combined Annual Intermediary 

Statement. For more information, see 

Regulations section 1.1295-1(g)(4).

Documentation. For all tax years 

subject to the section 1295 election, the 

shareholder must keep copies of all 

Forms 8621, attachments, and PFIC 

Annual Information Statements or 

Annual Intermediary Statements. Failure 

to produce these documents at the 

request of the IRS may result in 

invalidation or termination of the section 

1295 election. See Regulations section 

1.1295-1(f)(2)(ii). In rare and unusual 

circumstances, the IRS will consider 

requests for alternative documentation 

to verify the ordinary earnings and net 

capital gain of the PFIC. For more 

information, see Regulations section 

1.1295-1(g)(2).

B. Election To Extend Time for 

Payment of Tax

Who May Make the Election

A shareholder of a QEF may make 

Election B to extend the time for 

payment of the tax on its share of the 

undistributed earnings of the fund for 

the current tax year. If a U.S. 

partnership is a shareholder of a QEF, 

the election is made at the partner level.

Special Rules

• If this election is made, interest will be 

imposed on the amount of the deferred 

tax. This interest must be paid on the 

termination of the election (see the 

instructions for Part VI, line 24, later).

• The election cannot be made for any 

earnings on shares disposed of during 

the tax year or for a tax year that any 

portion of the shareholder's pro rata 

share of the fund's earnings is included 

in income under section 951 (relating to 

CFCs).

When To Make the Election

Generally, this election must be made 

by the due date, including extensions, of 

the shareholder's tax return for the tax 

year for which the shareholder reports 

the income related to the deferred tax.

How To Make the Election

Take these steps to make this election.

1. Check box B in Part II.

2. Complete lines 8a through 9c of 

Part III.

For more information on making 

Election B, see Temporary Regulations 

section 1.1294-1T.

See Part VI for annual reporting 

requirements for outstanding section 

1294 elections.

Instructions for Form 8621 (Rev. 01-2022) -7-
C. Election To Mark to Market 

PFIC Stock (Section 1296 

Election)

Who May Make the Election

Generally, an election to mark to market 

PFIC stock under section 1296 may be 

made by:

• A U.S. person who owns (or is treated 

as owning) marketable stock (defined 

earlier) in a PFIC at the close of such 

person's tax year, or

• A RIC that meets the requirements of 

section 1296(e)(2).

For more information, see section 

1296 and Regulations section 1.1296-1. 

See sections 1296(f) and (g) and 

Regulations sections 1.1296-1(e) and 

(h)(1)(ii) for information regarding stock 

owned through certain foreign entities.

When To Make the Election

This election must be made on or before 

the due date (including extensions) of 

the U.S. person's income tax return for 

the tax year in which the stock is 

marked to market under section 1296. A 

section 1296 election by a CFC is made 

by its controlling domestic shareholders 

(as defined in Regulations section 

1.964-1(c)(5)). For more information, 

see Regulations section 1.1296-1(h)(1)

(ii). Once made, the election applies to 

all subsequent tax years unless the 

election is revoked or terminated 

pursuant to Regulations section 

1.1296-1(h)(3).

How To Make the Election

Take these steps to make this election.

1. Check box C in Part II.

2. Complete either (a) Part V to 

calculate the amount due under section 

1291 (when required, as generally 

described in the next paragraph), or (b) 

Part IV to calculate the gain or loss on 

the stock in all other cases.

Coordination of Election C with section 1291 for first year of election. In 

general, when a shareholder makes a 

mark-to-market election for PFIC stock 

in a year other than the first year in 

which the shareholder holds stock in the 

PFIC and no QEF election is in effect, 

the PFIC stock is treated as sold at fair 

market value on the last day of the tax 

year for which the election is made, and 

the gain is treated as an excess 

distribution subject to section 1291. In 

addition, any distributions made during 

the year with respect to the PFIC stock 

are subject to section 1291. See section 

1296(j) and Regulations section 1.1296-

1(i).

D. Deemed Sale Election in 

Connection With a QEF 

Election

Who May Make the Election

This is a deemed sale election under 

section 1291(d)(2)(A). This election may 

be made by a U.S. person that elects to 

treat a PFIC as a QEF for a foreign 

corporation's tax year following its first 

tax year as a PFIC included in the 

shareholder's holding period (an 

unpedigreed QEF). A shareholder 

making this election is deemed to have 

sold the PFIC stock as of the first day of 

the PFIC's first tax year as a QEF (the 

qualification date) for its fair market 

value.

Special Rules

For purposes of this election, the 

following apply.

• The gain from the deemed sale is 

taxed as an excess distribution received 

on the qualification date.

• The basis of the shareholder’s PFIC 

stock held directly, or the stock or other 

property owned directly by the 

shareholder through which ownership of 

the PFIC is attributed to the 

shareholder, is increased by the gain 

recognized. The manner in which the 

basis adjustment is made depends on 

whether the shareholder is a direct or 

indirect shareholder. See Regulations 

section 1.1291-10(f).

• Solely for purposes of applying the 

PFIC rules, the shareholder's holding 

period of the stock begins on the 

qualification date.

• The election may be made for stock 

on which the shareholder will realize a 

loss, but that loss cannot be recognized. 

In addition, there is no basis adjustment 

for a loss.

• After the deemed sale, the PFIC 

becomes a pedigreed QEF with respect 

to the shareholder.

When To Make the Election

This election must be made by the due 

date, including extensions, of the 

shareholder's original tax return (or by 

filing an amended return within 3 years 

of the due date of the original return) for 

the tax year that includes the 

qualification date.

How To Make the Election

Take these steps to make this election.

1. Check box D in Part II.

2. Enter the gain or loss on line 15f 

of Part V.

3. If a gain is entered, complete 

line 16 to report the tax and interest due 

on the excess distribution.

For more information regarding 

making Election D, see Regulations 

section 1.1291-10.

E. Deemed Dividend Election in 

Connection With a QEF 

Election

Who May Make the Election

This is a deemed dividend election 

under section 1291(d)(2)(B). This 

election may be made by a U.S. person 

that elects to treat a PFIC that is also a 

CFC as a QEF for the foreign 

corporation's tax year following its first 

tax year as a PFIC included in the 

shareholder's holding period (an 

unpedigreed QEF).

A shareholder making this election is 

treated as receiving a dividend equal to 

its pro rata share of the post-1986 

earnings and profits (defined below in 

Special Rules) of the PFIC on the 

qualification date (defined under the 

instructions for Election D, earlier). The 

deemed dividend is taxed as an excess 

distribution, allocated only to the days in 

the shareholder's holding period during 

which the foreign corporation qualified 

as a PFIC. For this purpose, the 

shareholder's holding period ends on 

the day before the qualification date.

Special Rules

For purposes of this election, the 

following apply.

• The term “post-1986 earnings and 

profits” means the undistributed 

earnings and profits of the PFIC (as of 

the day before the qualification date) 

accumulated and not distributed in tax 

years beginning after 1986 during which 

the foreign corporation was a PFIC and 

while the shareholder held the stock 

(but without regard to whether the 

earnings relate to a period in which the 

PFIC was a CFC).

• The basis of the shareholder's PFIC 

stock held directly, or the stock or other 

property owned directly by the 

shareholder through which ownership of 

the PFIC is attributed to the 

shareholder, is increased by the amount 

of the deemed dividend. The manner in 

which the basis adjustment is made 

depends on whether the shareholder is 

a direct or indirect shareholder. See 

Regulations section 1.1291-9(f).

-8- Instructions for Form 8621 (Rev. 01-2022)
• Solely for purposes of applying the 

PFIC rules, the shareholder's holding 

period begins on the qualification date.

When To Make the Election

This election must be made by the due 

date (including extensions) of the 

shareholder's original tax return (or by 

filing an amended return within 3 years 

of the due date of the original return) for 

the tax year that includes the 

qualification date.

How To Make the Election

Take these steps to make this election.

1. Check box E in Part II.

2. Enter the dividend on line 15e of 

Part V as an excess distribution.

3. Complete line 16 to figure the tax 

and interest due on the excess 

distribution.

Attachments. The shareholder must 

attach a statement to Form 8621 that 

demonstrates the calculation of its pro 

rata share of the post-1986 earnings 

and profits of the PFIC that are treated 

as distributed to the shareholder on the 

qualification date. The post-1986 

earnings and profits may be reduced 

(but not below zero) by the amount that 

the shareholder satisfactorily 

demonstrates was previously included 

in its income or in the income of another 

U.S. person. The shareholder 

demonstrates this by including in the 

statement mentioned above the 

following information:

• The name, address, and identifying 

number of the U.S. person and the 

amount that was included in income;

• The tax year in which the amount was 

previously included in income;

• The provision of law under which the 

amount was previously included in 

income;

• A description of the transaction in 

which the shareholder acquired the 

stock of the PFIC from the other U.S. 

person; and

• The provision of law under which the 

shareholder's holding period includes 

the holding period of the other U.S. 

person.

For more information on making 

Election E, see Regulations section 

1.1291-9.

F. Deemed Sale Election With 

Respect to a Former PFIC or 

“Section 1297(e) PFIC”

Who May Make the Election

This is a deemed sale election under 

section 1298(b)(1) and Regulations 

section 1.1297-3(b) or 1.1298-3(b). This 

election may be made by:

• A U.S. person that is a shareholder of 

a foreign corporation that no longer 

qualifies as a PFIC under either the 

income or asset test of section 1297(a), 

or

• A U.S. shareholder (as defined in 

section 951(b)) that owns stock in a 

foreign corporation that is a CFC and a 

PFIC, but that is not treated as a PFIC 

with respect to the U.S. shareholder 

under section 1297(d).

Such persons may elect to treat the 

stock of the foreign corporation as sold 

for its fair market value on the last day of 

the last tax year of the foreign 

corporation in which it was treated as a 

PFIC (termination date) or the first day 

on which the qualified portion of the 

shareholder’s holding period in the 

section 1297(e) PFIC begins 

(qualification date), as applicable.

Special Rules

• The gain from the deemed sale is 

taxed as an excess distribution.

• The basis of the shareholder’s PFIC 

stock held directly, or the stock or other 

property owned directly by the 

shareholder through which ownership of 

the PFIC is attributed to the 

shareholder, is increased by the amount 

of the excess distribution taxed to the 

shareholder making Election F. The 

manner in which the basis adjustment is 

made depends on whether the 

shareholder is a direct or indirect 

shareholder. See Regulations sections 

1.1297-3(b)(5) and 1.1298-3(b)(5).

• Solely for purposes of applying the 

PFIC rules, the new holding period of 

the stock begins on the date after the 

termination date or on the qualification 

date, as applicable.

• Election F may be made for stock on 

which there would be a loss, but the loss 

is not recognized.

For more information on making this 

election, see Regulations sections 

1.1297-3(b) (section 1297(e) PFIC) and 

1.1298-3(b) (former PFIC).

When To Make the Election

This election must be made by the due 

date of the shareholder’s original tax 

return (or by filing an amended return 

within 3 years of the due date, as 

extended under section 6081, of the 

original return) for the tax year that 

includes, as appropriate, either the 

termination date or qualification date. 

However, see Form 8621-A (and 

Regulations sections 1.1297-3(e) and 

1.1298-3(e)) if the 3-year period has 

expired.

How To Make the Election

Take these steps to make this election.

1. Check box F in Part II.

2. Enter the gain or loss on line 15f 

of Part V. If a gain, complete the rest of 

Part V.

G. Deemed Dividend Election 

With Respect to a “Section 

1297(e) PFIC”

Who May Make the Election

This is a deemed dividend election 

under section 1298(b)(1) and 

Regulations section 1.1297-3(c). This 

election may be made by a shareholder 

that is a U.S. shareholder (as defined in 

section 951(b)) of a foreign corporation 

that is a CFC and a PFIC, but that is not 

treated as a PFIC with respect to the 

U.S. shareholder under section 1297(d).

Special Rules

A shareholder making this election is 

treated as receiving a dividend of its pro 

rata share of the post-1986 earnings 

and profits (defined later in 

Attachments) of the section 1297(e) 

PFIC on the CFC qualification date (as 

defined in Regulations section 

1.1297-3(d)). The deemed dividend is 

taxed under section 1291 as an excess 

distribution, allocated only to the days in 

the shareholder’s holding period during 

which the foreign corporation qualified 

as a PFIC. For this purpose, the 

shareholder’s holding period ends on 

the day before the CFC qualification 

date. After the deemed dividend 

election, the shareholder’s stock is not 

treated as stock in a PFIC.

For purposes of this election, the 

following rules apply:

• The basis of the shareholder’s PFIC 

stock held directly, or the stock or other 

property owned directly by the 

shareholder through which ownership of 

the PFIC is attributed to the 

shareholder, is increased by the amount 

of the deemed dividend. The manner in 

which the basis adjustment is made 

depends on whether the shareholder is 

a direct or indirect shareholder (as 

Instructions for Form 8621 (Rev. 01-2022) -9-
defined earlier). See Regulations 

section 1.1297-3(c)(6).

• Solely for purposes of applying the 

PFIC rules, the shareholder’s new 

holding period begins on the CFC 

qualification date.

When To Make the Election

Make this election by the due date of 

the shareholder’s original return (or by 

filing an amended return within 3 years 

of the due date, as extended under 

section 6081, of the original return) for 

the tax year that includes the first day on 

which the qualified portion of the 

shareholder’s holding period in the PFIC 

begins, as determined under section 

1297(d). However, see Form 8621-A 

(and Regulations section 1.1297-3(e)) if 

the 3-year period has expired.

How To Make the Election

Take these steps to make this election.

1. Check box G in Part II.

2. Enter the excess distribution on 

line 15e of Part V.

3. If the excess distribution is 

greater than zero, complete line 16 to 

figure the tax and interest due on the 

excess distribution.

4. Attach to Form 8621 the 

information specified below.

Attachments

The shareholder must attach a 

statement to Form 8621 that shows the 

calculation of its pro rata share of the 

post-1986 earnings and profits of the 

section 1297(e) PFIC (as defined in 

Regulations section 1.1291-9(j)(2)(v)) 

that is treated as distributed to the 

shareholder on the CFC qualification 

date.

• The CFC qualification date, as 

defined in Regulations section 

1.1297-3(d), for the Section 1297(e) 

PFIC.

• The beginning and ending dates of 

the tax year of the shareholder in which 

the CFC qualification date falls (that is, 

the election year).

• The shareholder’s pro rata share of 

the post-1986 earnings and profits of 

the Section 1297(e) PFIC that is treated 

as distributed to the shareholder on the 

CFC qualification date, including a 

schedule that shows the calculation of 

this amount as required under 

Regulations section 1.1297-3(c)(5)(ii). 

In addition, if the shareholder filed a 

Form 5471 for the Section 1297(e) PFIC 

for the election year, attach Schedule J 

(Form 5471).

The post-1986 earnings and profits 

may be reduced (but not below zero) by 

the amount that the shareholder 

satisfactorily shows was previously 

included in its income or in the income 

of another U.S. person. The shareholder 

shows this by including in the statement 

mentioned above the following 

information:

• The name, address, and identifying 

number of the U.S. person and the 

amount that was included in income.

• A description of the transaction in 

which the shareholder acquired the 

stock of the Section 1297(e) PFIC from 

the other U.S. person.

• The tax year in which the amount was 

previously included in income.

• The provision of law under which the 

shareholder's holding period includes 

the holding period of the other U.S. 

person.

For more information on making 

Election G, see Regulations section 

1.1297-3(c).

H. Deemed Dividend Election 

With Respect to a Former PFIC

Who May Make the Election

This is a deemed dividend election 

under section 1298(b)(1) and 

Regulations section 1.1298-3(c). This 

election may be made by a shareholder 

of a foreign corporation that no longer 

qualifies as a PFIC under either the 

income or asset test of section 1297(a) 

if the foreign corporation was a CFC 

during its last tax year as a PFIC.

Special Rules

A shareholder making this election is 

treated as receiving a dividend of its pro 

rata share of the post-1986 earnings 

and profits (defined later in 

Attachments) of the former PFIC on the 

termination date (as defined in 

Regulations section 1.1298-3(d)). The 

deemed dividend is taxed under section 

1291 as an excess distribution, 

allocated only to the days in the 

shareholder’s holding period during 

which the foreign corporation qualified 

as a PFIC. For this purpose, the 

shareholder’s holding period ends on 

the termination date. After the deemed 

dividend election, the shareholder’s 

stock is not treated as stock in a PFIC.

For purposes of this election, the 

following rules apply:

• The basis of the shareholder’s PFIC 

stock held directly, or the stock or other 

property owned directly by the 

shareholder through which ownership of 

the PFIC is attributed to the 

shareholder, is increased by the amount 

of the deemed dividend. The manner in 

which the basis adjustment is made 

depends on whether the shareholder is 

a direct or indirect shareholder (as 

defined earlier). See Regulations 

section 1.1298-3(c)(6).

• Solely for purposes of applying the 

PFIC rules, the shareholder’s new 

holding period begins on the day 

following the termination date.

When To Make the Election

This election must be made by the due 

date of the shareholder’s original return 

(or by filing an amended return within 3 

years of the due date, as extended 

under section 6081, of the original 

return) for the tax year that includes the 

first day on which the qualified portion of 

the shareholder’s holding period in the 

PFIC begins, as determined under 

section 1297(d). However, see Form 

8621-A (and Regulations section 

1.1298-3(e)) if the 3-year period has 

expired.

How To Make the Election

Take these steps to make this election.

1. Check box H in Part II.

2. Enter the excess distribution on 

line 15e of Part V.

3. If the excess distribution is 

greater than zero, complete line 16 to 

figure the tax and interest due on the 

excess distribution.

4. Attach to Form 8621 the 

information specified below.

Attachments

The shareholder must attach a 

statement to Form 8621 that shows the 

calculation of its pro rata share of the 

post-1986 earnings and profits of the 

former PFIC that is treated as 

distributed to the shareholder on the 

termination date.

• The termination date, as defined in 

Regulations section 1.1298-3(d), for the 

former PFIC.

• The beginning and ending dates of 

the tax year of the shareholder in which 

the termination date falls (that is, the 

election year).

• The shareholder’s pro rata share of 

the post-1986 earnings and profits of 

the former PFIC that is treated as 

distributed to the shareholder on the 

termination date, including a schedule 

that shows the calculation of this 

amount as required under Regulations 

section 1.1298-3(c)(5)(ii). In addition, if 

-10- Instructions for Form 8621 (Rev. 01-2022)
the shareholder filed a Form 5471 for 

the former PFIC for the election year, 

attach Schedule J (Form 5471).

The post-1986 earnings and profits 

may be reduced (but not below zero) by 

the amount that the shareholder 

satisfactorily shows was previously 

included in its income or in the income 

of another U.S. person. The shareholder 

shows this by including in the statement 

mentioned above the following 

information.

• The name, address, and identifying 

number of the U.S. person and the 

amount that was included in income.

• The tax year in which the amount was 

previously included in income.

• The provision of law under which the 

amount was previously included in 

income.

• A description of the transaction in 

which the shareholder acquired the 

stock of the former PFIC from the other 

U.S. person.

• The provision of law under which the 

shareholder’s holding period includes 

the holding period of the other U.S. 

person.

For more information on making 

Election H, see Regulations section 

1.1298-3(c).

Part III. Income From a 

QEF

For any tax year in which the foreign 

corporation is not treated as a QEF 

because it is not a PFIC under section 

1297(a), the shareholder is not required 

to complete Part III. However, the 

section 1295 election is not terminated. 

If the foreign corporation is treated as a 

PFIC in any subsequent tax year, the 

original election continues to apply and 

the shareholder must include in Part III 

its pro rata share of ordinary earnings 

and net capital gain and must also 

comply with the section 1295 annual 

reporting requirements.

All QEF shareholders complete lines 

6a through 7c. If you are making 

Election B, also complete lines 8a 

through 9c.

Lines 6 and 7

Lines 6a and 7a. Enter on lines 6a and 

7a, respectively, your pro rata share of 

the ordinary earnings and net capital 

gain of the QEF. The PFIC should 

provide these amounts or information 

that will help you determine your pro 

rata share. See Annual Election 

Requirements of the PFIC or 

Intermediary, earlier.

Lines 6b and 7b. Your share of the 

ordinary earnings and net capital gain of 

the QEF is reduced by the amounts you 

include in income under section 951 for 

the tax year with respect to the QEF. 

Your share of these amounts may also 

be reduced as provided in section 

1293(g).

Line 6c. This amount is treated as 

ordinary income on your tax return.

For a noncorporate taxpayer, include 

this amount as “other income” on 

Schedule 1 (Form 1040), line 8z, or on 

the comparable line of other 

noncorporate tax returns. For a 

corporate taxpayer, include this amount 

as “other income” on line 10 of Form 

1120, or on the comparable line of other 

corporate tax returns.

Line 7c. See the instructions for the 

Schedule D used for your tax return. 

Portions of the net capital gain may 

have to be reported on different lines of 

Schedule D, depending upon the 

information provided by the QEF 

concerning the section 1(h) categories 

of net capital gains and amounts 

thereof, derived by the QEF. See 

Regulations section 1.1293-1(a)(2) for 

three options a QEF may use to report 

and calculate capital gain.

Line 8

If you receive a distribution from the 

QEF during the current tax year, the 

distribution is first treated as a 

distribution out of the earnings and 

profits of the QEF accumulated during 

the year. If the total amount distributed 

(line 8b) exceeds the amount included 

in income (line 8a), the excess is treated 

as distributed out of the most recently 

accumulated earnings and profits. This 

amount is not taxable to you if you can 

satisfactorily demonstrate that the 

excess was previously included in your 

income or the income of another U.S. 

person. This is demonstrated by 

attaching a statement to Form 8621 that 

includes the information listed under 

Attachments for Election E, earlier. If the 

excess has not been previously 

included in your income or the income 

of another U.S. person, then the excess 

is subject to tax according to the rules of 

section 301(c).

Line 9

Line 9a. Enter the total tax on your total 

taxable income (including your share of 

undistributed earnings of the QEF) for 

the tax year (for example, from Form 

1120, Schedule J, line 11; or Form 

1040, line 24).

For this purpose, “undistributed 

earnings” is the excess, if any, of the 

amount included in gross income under 

section 1293(a) over the sum of the 

amount of any distribution and the 

portion of the amount attributable to 

stock in the QEF that you transferred or 

otherwise disposed of before the end of 

the QEF's tax year.

Line 9b. Calculate your total tax as if 

your total taxable income did not include 

your share of the undistributed earnings 

of the QEF (line 8e). Enter this amount 

on line 9b.

Line 9c. For corporations, enter this 

deferred tax on Form 1120, Schedule J, 

in brackets to the left of the entry space 

for line 11. Subtract this deferred tax 

amount from the sum of lines 7, 8, and 

10, and enter the difference on line 11.

For individuals, enter this deferred 

tax on Form 1040 in brackets to the left 

of the entry space for line 24. Subtract 

this deferred tax amount from the sum 

of lines 22 and 23, and enter the 

difference on line 24.

Part IV. Gain or (Loss) 

From a Section 1296 

Mark-to-Market Election

A shareholder that has made a 

mark-to-market election under section 

1296 with respect to PFIC stock 

completes lines 10a through 12 with 

respect to PFIC stock that the 

shareholder holds at the close of its tax 

year, and lines 13a through 14c, with 

respect to PFIC stock that it sold or 

disposed of during its tax year.

As discussed earlier in 

Mark-to-Market Election, a shareholder 

may be required to complete Part V, 

rather than Part IV, in the first year in 

which a mark-to-market election is 

made. See section 1296(j) and 

Regulations sections 1.1291-1(c)(4) and 

1.1296-1(i).

Lines 10a Through 12

If the fair market value of the PFIC stock 

as of the close of the tax year is more 

than the U.S. person's adjusted basis in 

the stock, the excess is treated as 

ordinary income.

If the adjusted basis of the stock is 

more than the fair market value as of the 

close of the tax year, the excess is 

allowed as a deduction, but only to the 

extent of, the lesser of:

1. The amount of the excess 

(line 10c), or

Instructions for Form 8621 (Rev. 01-2022) -11-
2. The Unreversed inclusions 

(defined below) with respect to such 

stock (line 11).

This amount is treated as an ordinary 

loss and as a deduction allowable in 

computing adjusted gross income.

Unreversed inclusions. Unreversed 

inclusions are the excess of the 

amounts that were included in income 

under the section 1296 mark-to-market 

rules for prior tax years over the 

amounts allowed as a deduction under 

the section 1296 mark-to-market rules 

for prior tax years. See section 1296(d) 

and Regulations section 1.1296-1(a)(3).

Lines 10c and 12. Corporations and 

individuals should include the gain or 

(loss) on the “other income” line of their 

tax returns. Other entities should include 

this amount on the comparable line of 

their tax return. However, RICs, for 

purposes of section 851(b), should treat 

amounts included in income as a 

dividend.

If a CFC makes a section 1296 

mark-to-market election with respect to 

a PFIC in which it owns stock, any 

line 10c gain is treated as foreign 

personal holding company income and 

any line 12 loss is treated as a 

deduction that is allocable to foreign 

personal holding company income.

Lines 13 Through 14c

Complete lines 13 through 14c if you 

sold or otherwise disposed of any 

section 1296 stock during the tax year. 

For purposes of lines 13 through 14c, 

“section 1296 stock” is any stock for 

which the taxpayer has made a 

mark-to-market election pursuant to 

section 1296(a), which is in effect for the 

tax year and for which the coordination 

rule of Regulations section 1.1296-1(i) 

does not apply.

Line 13c. If the fair market value of the 

stock on the date of sale or disposition 

(line 13a) is more than the U.S. person's 

adjusted basis in the stock on the date 

of sale or disposition (line 13b), the 

line 13c excess is a gain and is treated 

as ordinary income. Corporations and 

individuals should include the gain on 

the “other income” line of their tax 

returns. Other entities should include 

this amount on the comparable line of 

their tax return. However, RICs, for 

purposes of section 851(b), should treat 

this amount as a dividend.

If the adjusted basis of the stock 

(line 13b) is more than its fair market 

value (line 13a), the excess is a loss 

and is entered on line 13c as such. 

Furthermore, the filer must complete 

lines 14a and 14b, and, if applicable, 

line 14c.

Line 14a. Enter any Unreversed 

inclusions with respect to the stock (see 

definition, earlier).

Line 14b. Enter the loss from line 13c, 

but only to the extent of unreversed 

inclusions on line 14a. This loss is 

treated as ordinary loss. Corporations 

and individuals should include the loss 

on the “other income” line of their tax 

returns. Other entities should include 

this amount on the comparable line of 

their tax return.

Line 14c. Enter the amount by which 

the loss on line 13c is more than the 

unreversed inclusions. This amount is 

subject to the rules generally applicable 

to losses provided elsewhere in the 

Code and regulations thereunder. See 

Regulations section 1.1296-1(c)(4)(ii).

Multiple dispositions. In the case of 

multiple dispositions, attach a statement 

for each disposition using the same 

format shown on lines 13 through 14c. 

Then:

• Enter “multiple” on lines 13a, 13b, 

and 14a.

• Enter your net ordinary gains on 

line 13c (do not enter any net losses on 

line 13c).

• Enter your net ordinary losses on 

line 14b.

• Enter your net “other” losses on 

line 14c.

For more information relating to 

mark-to-market elections under section 

1296, see Regulations sections 

1.1296-1 and 1.1296-2.

Part V. Distributions From 

and Dispositions of Stock 

of a Section 1291 Fund

See Section 1291 Fund, earlier, for the 

definition of a section 1291 fund and 

also for a brief summary of the tax 

consequences for shareholders of a 

section 1291 fund.

Also, see Section 1291 Fund and 

Mark-to-Market Election, earlier, for a 

brief discussion of when a shareholder 

may be subject to section 1291 in the 

year that it makes a mark-to-market 

election under any provision of the 

Code, including section 1296.

Complete a separate Part V for each 

excess distribution. That is, if you 

receive a distribution from a section 

1291 fund with respect to shares for 

which you have different holding 

periods, complete lines 15a through 15e 

separately for each block of shares that 

has the same holding period 

(“applicable stock”). If you dispose of 

stock in a section 1291 fund for which 

you have different holding periods, 

complete line 15f for each block of 

shares that has the same holding 

period.

Line 15

Lines 15a and 15b

Enter your total distributions from the 

section 1291 fund with respect to the 

applicable stock for the periods 

indicated.

Note. A 10%-or-greater domestic 

corporation shareholder might be able 

to claim a deemed paid foreign tax 

credit under section 902 with respect to 

a distribution from a section 1291 fund 

in the fund’s tax year beginning before 

January 1, 2018. See Form 1118, 

Foreign Tax Credits—Corporations, to 

calculate the taxes deemed paid and 

the gross-up amount.

Line 15a. If the holding period of the 

applicable stock began in the current 

tax year, there is no excess distribution 

and you should complete Part V as 

follows: Enter on line 15a the total 

distributions you received from the 

section 1291 fund with respect to that 

stock during the current tax year. If you 

did not dispose of that stock during the 

tax year, do not complete the rest of 

Part V. If you did dispose of that stock 

during the tax year, skip lines 15b 

through 15e and complete lines 15f and 

16.

If the holding period of the applicable 

stock began in the current tax year, the 

line 15a amount is taxed according to 

the rules of section 301. To the extent 

that section 301(c)(1) is applicable, 

include the amount as a dividend on 

your income tax return. For 

corporations, include this line 15a 

amount on Form 1120, Schedule C, 

line 14. For individuals, include this 

line 15a amount on Form 1040, line 3b 

(and, if applicable, on Schedule B (Form 

1040), line 5).

Line 15c. Divide the amount on 

line 15b by 3. If the number of tax years 

in your holding period preceding the 

current tax year is less than 3, divide the 

amount on line 15b by that number.

Line 15e

Nonexcess distribution. The 

nonexcess distribution is the lesser of 

line 15a or line 15d. This amount is 

taxed according to the rules of section 

301. To the extent that section 301(c)(1) 

-12- Instructions for Form 8621 (Rev. 01-2022)
is applicable, include the amount as a 

dividend on your income tax return. For 

corporations, include this amount on 

Form 1120, Schedule C, line 14. For 

individuals, include this amount on Form 

1040, line 3b (and, if applicable, on 

Schedule B (Form 1040), line 5).

Excess distributions. If you received 

more than one distribution during the tax 

year with respect to the applicable 

stock, the excess distribution is 

apportioned among all actual 

distributions. Each apportioned amount 

is treated as a separate excess 

distribution.

Line 15f. Gain recognized on the 

disposition of stock of a section 1291 

fund is treated as an excess distribution. 

Loss realized on the disposition of stock 

of a section 1291 fund is not taken into 

account under section 1291 and thus, 

for example, does not reduce the 

amount of total gain subject to section 

1291. However, the loss may be 

recognized under another provision of 

the Code and reported accordingly. 

Stock of a section 1291 fund is 

considered disposed of if it is sold, 

transferred, or pledged.

Line 16

Lines 16a and 16b

Determine the taxation of the excess 

distribution on a separate sheet and 

attach it to Form 8621. Divide the 

amount on line 15e or 15f, whichever 

applies, by the number of days in your 

holding period. The holding period of 

the stock is treated as ending on the 

date of the distribution or disposition.

Special rules apply to the holding 

period if:

• The deemed dividend election 

(Election E) is made. See the 

instructions earlier for Election E.

• The mark-to-market election (Election 

C) is made or was made in a prior year 

(see section 1291(a)(3)(A)(ii)).

• The deemed dividend election with 

respect to a Section 1297(e) PFIC 

(Election G) or with respect to a Former 

PFIC (Election H) is made. See the 

instructions for Election G and Election 

H, earlier.

Determine the amount allocable to 

each tax year in your holding period by 

adding the amounts allocated to the 

days in each such tax year. Add the 

amounts allocated to the pre-PFIC and 

current tax years. Enter the sum on 

line 16b.

This amount is treated as ordinary 

income (for example, individuals and 

corporations should enter this amount 

on the “other income” line of their tax 

return).

Line 16c. Determine the increase in tax 

for each tax year in your holding period 

(other than the current tax year and 

pre-PFIC years). An increase in tax is 

determined for each PFIC year by 

multiplying the part of the excess 

distribution allocated to each year (as 

determined on line 16a) by the highest 

rate of tax under section 1 or section 11, 

whichever applies, in effect for that tax 

year. Add the increases in tax computed 

for all years. Enter the aggregate 

increases in tax (before credits) on 

line 16c.

The following table sets forth the 

highest rate of tax in effect under 

section 1 (applicable to individuals) for 

calendar years 1987 through 2021.

Tax Rates

Tax year(s) (based 

on calendar year 

taxpayer)

Highest rate of tax in 

effect under IRC 

section 1

2018–2021 37%

2013–2017 39.6%

2003–2012 35%

2002 38.6%

2001 39.1%

1993–2000 39.6%

1991–1992 31%

1988–1990 28%

1987 38.5%

Line 16d. To figure the foreign tax 

credit, the shareholder of a section 1291 

fund figures the total creditable foreign 

taxes attributable to the distribution. 

This amount includes the withholding 

taxes paid by the shareholder on the 

distribution and, in the case of the tax 

year of a section 1291 fund that begins 

before 2018, for 10%-or-greater 

domestic corporate shareholders, any 

taxes deemed paid under section 902. 

These taxes must be creditable under 

general foreign tax credit principles, and 

the shareholder must choose to claim 

the foreign tax credit for the current tax 

year.

The excess distribution taxes (the 

creditable foreign taxes attributable to 

an excess distribution) are determined 

by apportioning the total creditable 

foreign taxes between the part of the 

distribution that is an excess distribution 

and the part that is not.

The excess distribution taxes are 

allocated in the same manner as the 

excess distribution is allocated. See 

Excess distributions, earlier. Those 

taxes allocated to pre-PFIC tax years 

and the current tax year are taken into 

account for the current tax year under 

the general rules of the foreign tax 

credit.

The excess distribution taxes 

allocated to a PFIC year only reduce the 

increase in tax figured for that tax year 

(but not below zero). No carryover of 

any unused excess distribution taxes is 

allowed.

When you dispose of PFIC stock, the 

above foreign tax credit rules apply only 

to the part of the gain that, without 

regard to section 1291, would be 

treated under section 1248 as a 

dividend.

Line 16e. This amount is the total 

increase in tax and is included on your 

tax return as additional taxes.

For individuals, include the amount 

as part of the total for Form 1040, 

line 16. Check box 3 on line 16 and 

enter “1291TAX” in the entry space for 

that box.

For corporations, enter this amount 

on Form 1120, Schedule J, to the left of 

the entry space for line 2. Enter “Sec. 

1291” next to the amount and include it 

as part of the total for line 2. Other 

entities should use the comparable line 

on their income tax return.

Line 16f. Interest is charged on each 

net increase in tax for the period 

beginning on the due date (without 

regard to extensions) of your income tax 

return for the tax year to which an 

increase in tax is attributable and ending 

with the due date (without regard to 

extensions) of your income tax return for 

the tax year of the excess distribution.

The amount of interest is determined 

by using the rates and methods under 

section 6621. See section 1291(c)(3) for 

more information regarding the 

computation of interest, and also see 

Revenue Ruling 2021-17, 2021-37 

I.R.B. 362 (or successor Revenue 

Ruling) for a list of historical interest 

rates under section 6621.

For individuals, include the interest 

on Schedule 2 (Form 1040), line 17p.

For corporations, include the interest 

as part of the total for Form 1120, 

Schedule J, line 9g. See the instructions 

for Form 1120, Schedule J, line 9g.

Instructions for Form 8621 (Rev. 01-2022) -13-
Part VI. Status of Prior 

Year Section 1294 

Elections and Termination 

of Section 1294 Elections

Each person who has made a section 

1294 election must (1) complete lines 

17 through 20 to annually report the 

status of that election, and (2) complete 

lines 21 through 24 to report the 

termination of any section 1294 election 

that occurred during the tax year. See 

Temporary Regulations section 

1.1294-1T(h).

Line 17. Enter the last day of each tax 

year for which you made a section 1294 

election that is outstanding. Enter as 

MM/DD/YYYY. Do not include an 

election made in the current tax year.

Line 18. Enter the undistributed 

earnings of the QEF in the year for 

which the payment of tax was extended 

by the section 1294 election entered on 

line 17. If the election was partially 

terminated in a prior year, enter the 

remaining undistributed earnings.

Line 19. Enter the tax for which 

payment was extended by the section 

1294 election entered on line 17. If the 

election was partially terminated in the 

previous tax year, enter the balance of 

the deferred tax from line 25 of the prior 

year Form 8621.

Line 20. Enter the accrued interest 

(determined under section 6621) on the 

deferred tax. This is the interest accrued 

from the due date (not including 

extensions) of the return for the year for 

which the section 1294 election was 

made until the date the current year's 

return is filed.

Line 21. Enter the event(s) that 

occurred during the tax year that 

terminated one or more of the section 

1294 elections reported on line 17. A 

section 1294 election may be 

terminated voluntarily. However, an 

election will terminate automatically, in 

whole or in part, when any of the 

following events occur:

• An actual or deemed distribution of 

earnings to which the election is 

attributable (a loan, pledge, or 

guarantee by the QEF to or for the 

benefit of the taxpayer may cause a 

deemed distribution of the earnings);

• A disposition of stock in the QEF, 

including a pledge by the taxpayer of 

stock as security for a loan; or

• A change of status of the QEF (that 

is, a foreign corporation that is no longer 

a QEF or PFIC).

Line 22. Enter the earnings distributed 

or deemed distributed as a result of the 

events described on line 21. Earnings 

are treated as distributed out of the 

most recently accumulated earnings 

and profits. Accordingly, an event will 

first terminate the most recently made 

election.

An election may be terminated in 

whole or in part depending on the event 

causing the termination. Examples are 

as follows.

• A distribution of earnings will 

terminate an election to the extent the 

election is attributable to the earnings 

distributed.

• A loan, pledge, or guarantee by the 

QEF made directly or indirectly to the 

electing shareholder or related person 

will terminate an election to the extent of 

the undistributed earnings equal to the 

amount loaned, secured, or guaranteed.

• A disposition of stock will terminate all 

elections with respect to the 

undistributed earnings attributable to 

that stock.

• A change in status of the QEF will 

terminate all elections.

For more information, see 

Regulations section 1.1294-1T(e).

Line 23. Enter the deferred tax due 

from the termination of the section 1294 

election. The deferred tax entered on 

line 19 is due if the election was 

completely terminated. If the election 

was only partially terminated, a 

proportionate amount of the deferred 

tax is due. That amount is determined 

by multiplying the amount entered on 

line 19 by a fraction, of which the 

numerator is the amount entered on 

line 22 and the denominator is the 

amount entered on line 18. The deferred 

tax is due by the due date of the 

shareholder's income tax return (without 

regard to extensions) for the year of 

termination.

When the election is terminated, 

corporations include the deferred tax as 

part of the total for Form 1120, 

Schedule J, line 11. Also, enter the 

deferred tax to the left of line 11 and 

label it as “Sec. 1294 deferred tax.”

For individuals, include the deferred 

tax as part of the total for Schedule 2 

(Form 1040), line 17z. Enter “1294DT” 

and the amount of the deferred tax in 

the entry space for that line.

Line 24. Enter the interest accrued on 

the deferred tax. Interest accrues 

beginning on the due date (without 

regard to extensions) of your tax return 

for the tax year in which the section 

1294 election is made and ending with 

the due date (without regard to 

extensions) of your tax return for the tax 

year of the termination. Interest is 

computed using the rates and methods 

under section 6621.

For corporations, enter the amount of 

section 1294 interest at the bottom right 

margin of Form 1120, page 1, and label 

it as “Sec. 1294 interest.” Also, include 

this amount in your check or money 

order payable to the United States 

Treasury. If you would otherwise receive 

a refund, reduce the refund by the 

interest due.

For individuals, include the interest 

from line 24 on Schedule 2 (Form 1040), 

line 17q.

Lines 25 and 26. Complete lines 25 

and 26 only if a section 1294 election is 

partially terminated. Enter on line 25 the 

part of the deferred tax outstanding after 

the partial termination of the section 

1294 election. This amount should 

equal line 19 minus line 23.

Note. As indicated in the line 19 

instructions, for next year, be sure to 

enter the line 25 amount of this year’s 

Form 8621 on line 19 of next year’s 

Form 8621.

Enter on line 26 the accrued interest 

remaining after the partial termination of 

the section 1294 election. This amount 

should equal line 20 minus line 24.

-14- Instructions for Form 8621 (Rev. 01-2022)
Disclosure, Privacy Act, and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the 

Internal Revenue laws of the United States. Sections 6001, 6011, 6012(a), and 6109, and their regulations, require you to 

provide this information. We need this information to ensure that you are complying with the Internal Revenue laws and to allow 

us to figure and determine the right amount of tax. You must fill in all parts of the tax form that apply to you. If you do not file a 

return under circumstances requiring its filing, do not provide the information we ask for, or provide fraudulent information, you 

may be charged penalties and be subject to criminal prosecution.

We may disclose your tax information to the Department of Justice for civil and criminal litigation, and to cities, states, the 

District of Columbia, and U.S. possessions and commonwealths for use in administering their tax laws. We may also disclose 

to foreign countries pursuant to a treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law 

enforcement and intelligence agencies to combat terrorism.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless 

the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long 

as their contents may become material in the administration of any Internal Revenue law.

The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for 

individual taxpayers filing this form is approved under OMB control number 1545-0074 and the estimated burden for business 

taxpayers is approved under OMB control number 1545-0123. The estimated burden for all other taxpayers who file this form is 

shown below.

Recordkeeping .................................................................... 16 hr., 58 min.

Learning about the law or the form ...................................................... 11 hr., 24 min.

Preparing and sending the form to the IRS ................................................. 20 hr., 34 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we 

would be happy to hear from you. You can send us comments from IRS.gov/FormComments. Or you can write to the Internal 

Revenue Service, Tax Forms and Publications, 1111 Constitution Ave. NW, IR-6526, Washington, DC 20224. Do not send the 

tax form to this office. Instead, see When and Where To File, earlier.

Instructions for Form 8621 (Rev. 01-2022) -15-