Part II. — Instruction 8621 — Instructions for Form

A. Election To Treat the PFIC as a QEF (Section 1295 Election)

Who May Make the Election

Generally, a U.S. person that owns stock in a PFIC, directly or indirectly, may make Election A to treat the PFIC as a QEF.

Note: A separate election must be made for each PFIC that the shareholder wants to treat as a QEF.

Exception. A tax-exempt organization that is not taxable under section 1291 may not make the election. In addition, a tax-exempt organization that is not taxable under section 1291 is not subject to a QEF election made by a pass-through entity.

Chain of ownership. In a chain of ownership, only the first U.S. person that is a direct or indirect shareholder of the PFIC may make the election.

Pass-through entities. A QEF election made by a domestic partnership, S corporation, or estate is made in the pass-through entity's capacity as a shareholder of a PFIC. The entity will include the QEF earnings as income for the year in which the PFIC's tax year ends. The interest holder in the pass-through entity takes the income into account under the rules applicable to inclusions of income from the pass-through entity.

Affiliated groups. The common parent of an affiliated group of corporations that joins in filing a consolidated income tax return makes the QEF election for all members of the affiliated group that are shareholders in the PFIC. An election by a common parent is effective for all members of the group that own stock in the PFIC at the time the election is made or any time thereafter.

For more information on who may make the election, see Regulations section 1.1295-1(d).

When To Make the Election

Generally, a shareholder must make the election to be treated as a QEF by the due date, including extensions, for filing the shareholder's income tax return for the first tax year to which the election will apply (the “election due date”). See Retroactive election , below, for exceptions. The foreign corporation will be treated as a QEF with respect to the shareholder for the tax year in which the election is made and for each subsequent tax year of the foreign corporation ending with or within a tax year of the shareholder for which the election is effective.

Protective statement regime. Under the protective statement regime, a shareholder may preserve the ability to make a retroactive election if the shareholder:

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);
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;
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
Complied with the other terms and conditions of the protective statements.

The Protective Statement must be attached to the shareholder's tax return for the shareholder's first tax year to which the statement will apply. For required content of the statement and other information, see Regulations section 1.1295-3(c).

Consent regime. Under the consent regime, a shareholder that has not satisfied the requirements of the protective regime may request that the IRS permit a retroactive election. The consent regime applies only if:

The shareholder reasonably relied on tax advice of a competent and qualified tax professional;
The interest of the U.S. Government will not be prejudiced if the consent is granted;
The shareholder requests consent before the PFIC status issue is raised on audit; and
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.

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

Check box A in Part II of Form 8621.
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.
Attach Form 8621 to a timely filed tax return (or, if applicable, partnership or exempt organization return).

The shareholder obtains the permission of the IRS to make a retroactive election under the Consent regime (described later).

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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:

Complete the applicable lines of Part III, and
Attach Form 8621 to a timely filed tax return (or, if applicable, a partnership or exempt organization return).

Annual Election Requirements of the PFIC or Intermediary

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

Special Rules

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:

The shareholder's pro rata share of the PFIC's ordinary earnings and net capital gain for that tax year, or
Sufficient information to enable the shareholder to calculate its pro rata share of the PFIC's ordinary earnings and net capital gain for that tax year.

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

Annual Intermediary Statement. If the shareholder holds stock in a PFIC through an intermediary, an Annual Intermediary Statement may be issued in lieu of the PFIC Annual Information Statement. For the definition of an “intermediary,” see Regulations section 1.1295-1(j). For details on the information that should be included in the Annual Intermediary Statement, see Regulations section 1.1295-1(g)(3).

Combined statements. A PFIC that owns directly or indirectly any shares of stock in one or more PFICs may provide its shareholders with a PFIC Annual Information Statement in which it combines its own required information and representations with the information and representations of any lower-tier PFIC. Similarly, an intermediary through which a shareholder indirectly holds stock in more than one PFIC may provide the shareholder with a combined Annual Intermediary Statement. For more information, see Regulations section 1.1295-1(g)(4).

Documentation. For all tax years subject to the section 1295 election, the shareholder must keep copies of all Forms 8621, attachments, and PFIC Annual Information Statements or Annual Intermediary Statements. Failure to produce these documents at the request of the IRS may result in invalidation or termination of the section 1295 election. See Regulations section 1.1295-1(f)(2)(ii). In rare and unusual circumstances, the IRS will consider requests for alternative documentation to verify the ordinary earnings and net capital gain of the PFIC. For more information, see Regulations section 1.1295-1(g)(2).

B. Election To Extend Time for Payment of Tax

Who May Make the Election

A shareholder of a QEF may make Election B to extend the time for payment of the tax on its share of the undistributed earnings of the fund for the current tax year.

If this election is made, interest will be imposed on the amount of the deferred tax. This interest must be paid on the termination of the election (see the instructions for Part VI, line 24 , later).
The election cannot be made for any earnings on shares disposed of during the tax year or for a tax year that any portion of the shareholder's pro rata share of the fund's earnings is included in income under section 951 (relating to CFCs).

When To Make the Election

Generally, this election must be made by the due date, including extensions, of the shareholder's tax return for the tax year for which the shareholder reports the income related to the deferred tax.

How To Make the Election

Take these steps to make this election.

Check box B in Part II.
Complete lines 8a through 9c of Part III.

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

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

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

CFC is made by its controlling domestic shareholders (as defined in Regulations section 1.964-1(c)(5)). For more information, see Regulations section 1.1296-1(h)(1)(ii). Once made, the election applies to all subsequent tax years unless the election is revoked or terminated pursuant to Regulations section 1.1296-1(h)(3).

How To Make the Election

Take these steps to make this election.

Check box C in Part II.
Complete either (a) Part V to calculate the amount due under section 1291 (when required, as generally described in the next paragraph), or (b) Part IV to calculate the gain or loss on the stock in all other cases.

Coordination of Election C with section 1291 for first year of election. In general, when a shareholder makes a mark-to-market election for PFIC stock in a year other than the first year in which the shareholder holds stock in the PFIC and no QEF election is in effect, the PFIC stock is treated as sold at fair market value on the last day of the tax year for which the election is made, and the gain is treated as an excess distribution subject to section 1291. In addition, any distributions made during the year with respect to the PFIC stock are subject to section 1291. See section 1296(j) and Regulations section 1.1296-1(i).

D. Deemed Sale Election in Connection With a QEF Election

Who May Make the Election

This is a deemed sale election under section 1291(d)(2) (A). This election may be made by a U.S. person that elects to treat a PFIC as a QEF for a foreign corporation's tax year following its first tax year as a PFIC included in the shareholder's holding period (an unpedigreed QEF). A shareholder making this election is deemed to have sold the PFIC stock as of the first day of the PFIC's first tax year as a QEF (the qualification date) for its fair market value.

Special Rules

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

When To Make the Election

This election must be made by the due date, including extensions, of the shareholder's original tax return (or by filing an amended return within 3 years of the due date of the original return) for the tax year that includes the qualification date.

How To Make the Election

Take these steps to make this election.

Check box D in Part II.
Enter the gain or loss on line 15f of Part V.
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 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.

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).

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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

Such persons may elect to treat the stock of the foreign corporation as sold for its fair market value on the last day of the last tax year of the foreign corporation in which it was treated as a PFIC (termination date) or the first day on which the qualified portion of the shareholder’s holding period in the section 1297(e) PFIC begins (qualification date), as applicable.

Special Rules

The gain from the deemed sale is taxed as an excess distribution.

Take these steps to make this election.

Check box E in Part II.
Enter the dividend on line 15e(2) of Part V as an excess distribution.
Complete line 16 to figure the tax and interest due on the excess distribution.

Attachments. The shareholder must attach a statement to Form 8621 that demonstrates the calculation of its pro rata share of the post-1986 earnings and profits of the PFIC that are treated as distributed to the shareholder on the qualification date. The post-1986 earnings and profits may be reduced (but not below zero) by the amount that the shareholder satisfactorily demonstrates was previously included in its income or in the income of another U.S. person. The shareholder demonstrates this by including in the statement mentioned above the following information.

The name, address, and identifying number of the U.S. person and the amount that was included in income.
The 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).

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).

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.

Check box F in Part II.
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).

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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.

The basis of the shareholder’s PFIC stock held directly, or the stock or other property owned directly by the shareholder through which ownership of the PFIC is attributed to the shareholder, is increased by the amount of the deemed dividend. The manner in which the basis adjustment is made depends on whether the shareholder is a direct or indirect shareholder (as defined earlier). See Regulations section 1.1297-3(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

The beginning and ending dates of the tax year of the shareholder in which the CFC qualification date falls (that is, the election year).
The shareholder’s pro rata share of the post-1986 earnings and profits of the Section 1297(e) PFIC that is treated as distributed to the shareholder on the CFC qualification date, including a schedule that shows the calculation of this amount as required under Regulations section 1.1297-3(c)(5)(ii). In addition, if the shareholder filed a Form 5471 for the Section 1297(e) PFIC for the election year, attach Schedule J (Form 5471) .

The post-1986 earnings and profits may be reduced (but not below zero) by the amount that the shareholder satisfactorily shows was previously included in its income or in the income of another U.S. person. The shareholder shows this by including in the statement mentioned above the following information.

The name, address, and identifying number of the U.S. person and the amount that was included in income.

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
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.

Take these steps to make this election.

Check box G in Part II.
Enter the excess distribution on line 15e(2) of Part V.
If the excess distribution is greater than zero, complete line 16 to figure the tax and interest due on the excess distribution.
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.

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is a direct or indirect shareholder (as defined earlier). See Regulations section 1.1298-3(c)(6).

Solely for purposes of applying the PFIC rules, the shareholder’s new holding period begins on the day following the termination date.

When To Make the Election

This election must be made by the due date of the shareholder’s original return (or by filing an amended return within 3 years of the due date, as extended under section 6081, of the original return) for the tax year that includes the first day on which the qualified portion of the shareholder’s holding period in the PFIC begins, as determined under section 1297(d). However, see Form 8621-A (and Regulations section 1.1298-3(e)) if the 3-year period has expired.

How To Make the Election

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.

Take these steps to make this election.

Check box H in Part II.
Enter the excess distribution on line 15e(2) of Part V.
If the excess distribution is greater than zero, complete line 16 to figure the tax and interest due on the excess distribution.
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 name, address, and identifying number of the U.S. person and the amount that was included in income.

For more information on making Election H, see Regulations section 1.1298-3(c).