U. S. Business Income Tax Return

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Instructions for Form 8621
(Rev. December 2025)

Information Return by a Shareholder of a Passive Foreign Investment Company or
Qualified Electing Fund
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.

New Part V lines on page 3 of Form 8621. In the entry
space provided for the new line above line 15a, filers are
required to enter a three-letter currency code.
New line 15e(2) requests filers to report the line 15e(1)
amount in U.S. dollars. If the amount on line 15e(1) is in a
foreign currency, filers must convert the amount to U.S.
dollars.
See instructions for more information about both of
these new lines.

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).
Dec 8, 2025

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,
• A shareholder of a PFIC where the PFIC itself is a
shareholder of another PFIC, 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.

Instructions for Form 8621 (Rev. 12-2025) Catalog Number 10784P
Department of the Treasury Internal Revenue Service www.irs.gov

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What’s New

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.

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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

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 must use
adjusted basis if:
1. The corporation is not publicly traded for the tax
year; and
2. The corporation is a controlled foreign corporation
(CFC) under Regulations section 1.1297-1(d)(1)(v)(B)(2).
In addition, a non-publicly traded foreign corporation
that is not a CFC may use adjusted basis if an election is
made to use adjusted basis. The election can be made
either by the corporation or by certain of its owners. If
made by an owner, the election must be made according
to the rules of Regulations section 1.1297-1(d)(1)(iv).
Publicly traded foreign corporations must use fair
market value when determining PFIC status using the
asset test. See Regulations section 1.1297-1(f)(7) for
guidance on when a foreign corporation is publicly traded
for this purpose.
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
2

CFC overlap rule. A 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.

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)).
Instructions for Form 8621 (Rev. 12-2025)

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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.

any corporation in which it owns at least 25% of the stock
(by value).

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Tax Consequences for Shareholders of a Section
1291 Fund

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 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
Instructions for Form 8621 (Rev. 12-2025)

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-to-market 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.

Rounding Off to Whole Dollars

The shareholder may enter decimal points and cents
when completing Form 8621. However, the shareholder
should consider rounding off cents to whole dollars on
Form 8621 because it may make completing the form
easier. The shareholder must either round off all amounts
on Form 8621 to whole dollars or use cents for all
amounts. To round, drop amounts under 50 cents and
increase amounts from 50 to 99 cents to the next dollar.
For example, $8.40 rounds to $8 and $8.50 rounds to $9.
If two or more amounts must be added to figure the
amount to enter on a line, include cents when adding the
amounts and round off only the total.
3

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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.

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).

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Specific Instructions
Important: All line references to Form 1120 and Form
1040 are to the 2025 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,
available at IRS.gov/Form8938, generally, and in
particular, Duplicative Reporting and the specific
instructions for Part IV, Excepted Specified Foreign
Financial Assets.

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
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).
4

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 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.
Instructions for Form 8621 (Rev. 12-2025)

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Election To Be Treated as a Qualifying
Insurance Corporation

• 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 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.

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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.

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
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
Instructions for Form 8621 (Rev. 12-2025)

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 later in these
Instructions.
Exceptions to these filing requirements are described
later 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;
5

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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).

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.

• 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.

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).

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).

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).

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 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).

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.

Exception if aggregate value of shareholder’s PFIC
stock is $25,000 or less. A shareholder is not required
6

Instructions for Form 8621 (Rev. 12-2025)

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TREASURY/IRS AND OMB USE ONLY DRAFT

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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.

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).
Instructions for Form 8621 (Rev. 12-2025)

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 1.1295-1(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).

7

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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.

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
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.

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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).

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).

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.

When To Make the Election

For other information required to be included in the
PFIC Annual Information Statement, see Regulations
section 1.1295-1(g).

How To Make the Election

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).

For more information on making Election B, see
Temporary Regulations section 1.1294-1T.

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.

8

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.

Take these steps to make this election.
1. Check box B in Part II.
2. Complete lines 8a through 9c of Part III.

Note: The temporary regulations instruct taxpayers to file
a duplicate copy of the election with the Philadelphia
service center, in addition to filing the election with their
returns for the year. Taxpayers may, but are not required
to, file the duplicate copy.
See Part VI for annual reporting requirements for
outstanding section 1294 elections.

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
Instructions for Form 8621 (Rev. 12-2025)

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Annual Election Requirements of the PFIC or
Intermediary

If a U.S. partnership is a shareholder of a QEF, the
election is made at the partner level.

TREASURY/IRS AND OMB USE ONLY DRAFT
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

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.
Instructions for Form 8621 (Rev. 12-2025)

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).
9

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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.

• After the deemed sale, the PFIC becomes a pedigreed
QEF with respect to the shareholder.

TREASURY/IRS AND OMB USE ONLY DRAFT

• 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

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).
10

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 1.12973(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, Return by a
Shareholder Making Certain Late Elections To End
Treatment as a Passive Foreign Investment Company,
available at IRS.gov/Form8621A, (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).
Instructions for Form 8621 (Rev. 12-2025)

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DRAFT

Take these steps to make this election.
1. Check box E in Part II.
2. Enter the dividend on line 15e(2) of Part V as an
excess distribution.
3. Complete line 16 to figure the tax and interest due
on the excess distribution.

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.

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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.

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 1.1297-3(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(2) 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.
Instructions for Form 8621 (Rev. 12-2025)

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

11

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• The basis of the shareholder’s PFIC stock held directly,

• 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).

TREASURY/IRS AND OMB USE ONLY DRAFT
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.

Take these steps to make this election.
1. Check box H in Part II.
2. Enter the excess distribution on line 15e(2) 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 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.
12

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
Instructions for Form 8621 (Rev. 12-2025)

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How To Make the Election

• 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.

TREASURY/IRS AND OMB USE ONLY DRAFT
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 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. 12-2025)

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).

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Line 9

2. The Unreversed inclusions (defined below) with
respect to such stock (line 11).

TREASURY/IRS AND OMB USE ONLY DRAFT
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

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

In the entry space provided above line 15a, enter the
three-letter currency code of the currency used on lines
15a through 15e(1). Currency codes are available at sixgroup.com/en/products-services/financial-information/
data-standards.html#scrollTo=currency-codes.
The excess distribution must be determined in a single
currency. In general, the excess distribution must be
calculated in U.S. dollars. Each distribution is translated
into the U.S. dollar at the spot rate on the date on which
such distribution is made. However, if all distributions that
must be taken into account for purposes of calculating the
excess distribution are made in a single foreign currency,
the excess distribution must be calculated in the currency
in which the distributions are made. Each ratable portion
of a total excess distribution determined in such foreign
currency is then translated into U.S dollars at the spot rate
on the date of the distribution to which the ratable portion
is allocated. See section 1291(b)(3)(E) and Proposed
Regulations section 1.1291-2(d)(4).

Lines 15a and 15b
Enter your total distributions from the section 1291 fund
with respect to the applicable stock for the periods
indicated.
14

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(1)
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) 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.

Instructions for Form 8621 (Rev. 12-2025)

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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.

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, available at IRS.gov/Form1118, to
calculate the taxes deemed paid and the gross-up
amount.

TREASURY/IRS AND OMB USE ONLY DRAFT
Line 16
Lines 16a and 16b

Line 16d

Determine the taxation of the excess distribution on a
separate sheet and attach it to Form 8621. Divide the
amount on line 15e(2) 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.

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.

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.

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).

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.

Line 16c

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.

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 2025.

Tax Rates
Tax year(s) (based on calendar Highest rate of tax in effect
year taxpayer)
under IRC section 1
2018–2025

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%

Instructions for Form 8621 (Rev. 12-2025)

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 1. Enter
“Sec. 1291” next to the amount and include it as part of
the total for line 1. 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 2024-18, 2024-37 I.R.B.
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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.

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.

TREASURY/IRS AND OMB USE ONLY DRAFT
584 (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 9z. See the instructions
for Form 1120, Schedule J, line 9z.

Part VI. Status of Prior Year Section
1294 Elections and Termination of
Section 1294 Elections

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.

16

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 on Form 1120, Schedule J, line 11, and label it as
“Sec. 1294 interest.”
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.

Instructions for Form 8621 (Rev. 12-2025)

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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).

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).

TREASURY/IRS AND OMB USE ONLY DRAFT

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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.

Instructions for Form 8621 (Rev. 12-2025)

17

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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.

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.

18

Instructions for Form 8621 (Rev. 12-2025)

DRAFT

DRAFT

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.