Instructions for Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund

• Legal Form Number: 8621
• Year: 2018
• Issuer: Treasury Department
• Section: Treasury Department

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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 instruc-

tions. 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