26 C.F.R. § 1.1298-3T Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a former PFIC (temporary).
Title 26 - Internal Revenue
(a) through (d) [Reserved] For further guidance see §1.1298–3(a) through (d). (e) Late purging elections requiring special consent—(1) In general. This section prescribes the exclusive rules under which a shareholder of a former PFIC may make a section 1298(b)(1) election after the time prescribed in paragraph (b)(2) or (c)(4) of this section for making a deemed sale or a deemed dividend election has elapsed (late purging election). Therefore, a shareholder may not seek such relief under any other provisions of the law, including §301.9100–3 of this chapter. A shareholder may request the consent of the Commissioner to make a late purging election for the taxable year of the shareholder that includes the termination date provided the shareholder satisfies the requirements set forth in this paragraph (e). The Commissioner may, in his discretion, grant relief under this paragraph (e) only if: (i) In a case where the shareholder is requesting consent under this paragraph (e) after June 30, 2006, the shareholder requests such consent before a representative of the Internal Revenue Service raises upon audit the PFIC status of the foreign corporation for any taxable year of the shareholder; (ii) The shareholder has agreed in a closing agreement with the Commissioner, described in paragraph (e)(3) of this section, to eliminate any prejudice to the interests of the U.S. government, as determined under paragraph (e)(2) of this section, as a consequence of the shareholder's inability to file amended returns for its taxable year in which the termination date falls, or an earlier closed taxable year in which the shareholder has taken a position that is inconsistent with the treatment of the foreign corporation as a PFIC; and (iii) The shareholder satisfies the procedural requirements set forth in paragraph (e)(3) of this section. (2) Prejudice to the interests of the U.S. government. The interests of the U.S. government are prejudiced if granting relief would result in the shareholder having a lower tax liability (other than by a de minimis amount), taking into account applicable interest charges, for the taxable year that includes the termination date (or a prior taxable year in which the taxpayer took a position on a return that was inconsistent with the treatment of the foreign corporation as a PFIC) than the shareholder would have had if the shareholder had properly made the section 1298(b)(1) election in the time prescribed in paragraph (b)(2) or (c)(3) of this section (or had not taken a position in a return for an earlier year that was inconsistent with the status of the foreign corporation as a PFIC). The time value of money is taken into account for purposes of this computation. (3) Procedural requirement: (i) In general. The amount due with respect to a late purging election is determined in the same manner as if the purging election had been timely filed. However, the shareholder is also liable for interest on the amount due, determined for the period beginning on the due date (without extensions) for the taxpayer's income tax return for the year in which the CFC qualification date falls and ending on the date the late purging election is filed with the IRS. (ii) Filing instructions. A late purging election is made by filing a completed Form 8621–A, “Return by a Shareholder Making Certain Late Elections to End Treatment as a Passive Foreign Investment Company.” (4) Time and manner of making late election: (i) Time for making a late purging election. A shareholder may make a late purging election in the manner provided in paragraph (e)(4)(ii) of this section at any time. The date the election is filed with the IRS will determine the amount of interest due under paragraph (e)(3) of this section. (ii) Manner of making a late purging election. A shareholder makes a late purging election by completing Form 8621–A in the manner required by that form and this section and filing that form with the Internal Revenue Service, DP 8621–A, Ogden, UT 84201. (f) Effective date. (1) The rules of this section are applicable as of December 8, 2005. (2) The applicability of this section will expire on or before December 8, 2008. [T.D. 9232, 70 FR 72913, Dec. 8, 2005; T.D. 9232, 71 FR 4042, Jan. 25, 2006]
Title 26: Internal Revenue
PART 1—INCOME TAXES
Special Rules for Determining Capital Gains and Losses
§ 1.1298-3T Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a former PFIC (temporary).
