Part VI. Status — Instruction 8621 — Instructions for Form

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).

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);

An election may be terminated in whole or in part depending on the event causing the termination. Examples are as follows.

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.

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).

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 Instructions for Form 8621 (Rev. 12-2025)

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

Disclosure, Privacy Act, and Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the United States. Sections 6001, 6011, 6012(a), and 6109, and their regulations, require you to provide this information. We need this information to ensure that you are complying with the Internal Revenue laws and to allow us to figure and determine the right amount of tax. You must fill in all parts of the tax form that apply to you. If you do not file a return under circumstances requiring its filing, do not provide the information we ask for, or provide fraudulent information, you may be charged penalties and be subject to criminal prosecution.

We may disclose your tax information to the Department of Justice for civil and criminal litigation, and to cities, states, the District of Columbia, and U.S. possessions and commonwealths for use in administering their tax laws. We may also disclose to foreign countries pursuant to a treaty, to federal and state agencies to enforce federal nontax criminal laws, or to federal law enforcement and intelligence agencies to combat terrorism.

You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act 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.

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.

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)