ARTICLE
28 January 2022

Proposed Regs Affect PFIC Elections

CW
Cadwalader, Wickersham & Taft LLP

Contributor

Cadwalader, established in 1792, serves a diverse client base, including many of the world's leading financial institutions, funds and corporations. With offices in the United States and Europe, Cadwalader offers legal representation in antitrust, banking, corporate finance, corporate governance, executive compensation, financial restructuring, intellectual property, litigation, mergers and acquisitions, private equity, private wealth, real estate, regulation, securitization, structured finance, tax and white collar defense.
On January 25, 2022, the IRS and Treasury proposed regulations that would treat U.S. partners, instead of their partnerships, as PFIC shareholders for making qualified electing fund...
United States Finance and Banking
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On January 25, 2022, the IRS and Treasury proposed regulations that would treat U.S. partners, instead of their partnerships, as PFIC shareholders for making qualified electing fund, mark-to-market, or purging elections, recognizing QEF or MTM income, applying the controlled foreign corporation overlap rule, and filing Forms 8621 (PFIC information returns). Partners would be required to notify the partnership of their election. The proposed regulations would apply from the date they are finalized, and would not nullify previous partnership-level elections.

On the same date, the IRS and Treasury also finalized previously proposed regulations that "look through" domestic partnerships when determining a controlled foreign corporation's 10% U.S. shareholders, instead of calculating percentage ownership at the partnership level.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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