Part V. Distributions From and Dispositions of Stock of a Section 1291 Fund

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.

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 six- group.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.

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.

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.

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

Line 16

Lines 16a and 16b

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. 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.

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.

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).

Line 16c

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.

Line 16d

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.

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.

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.

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.

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.

Tax Rates

Instructions for Form 8621 (Rev. 12-2025) 15

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.