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Proposed Regs Affect PFIC Elections

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.

Key Contacts

 

Adam Blakemore
Partner
T. +44 (0) 20 7170 8697
adam.blakemore@cwt.com

Linda Z. Swartz
Partner
T. +1 212 504 6062
linda.swartz@cwt.com

Jon Brose
Partner
T. +1 212 504 6376
jon.brose@cwt.com

Andrew Carlon
Partner
T. +1 212 504 6378
andrew.carlon@cwt.com

Mark P. Howe
Partner
T. +1 202 862 2236
mark.howe@cwt.com

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