[Federal Register Volume 78, Number 251 (Tuesday, December 31, 2013)]
[Rules and Regulations]
[Pages 79602-79613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-30847]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 1

[TD 9650]
RIN 1545-BK67; RIN 1545-BK91


Definitions and Reporting Requirements for Shareholders of 
Passive Foreign Investment Companies; Insurance Income of a Controlled 
Foreign Corporation for Taxable Years Beginning After December 31, 1986

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTION: Final and temporary regulations.

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SUMMARY: This document contains temporary regulations that provide 
guidance on determining ownership of a passive foreign investment 
company (``PFIC'') and on the annual filing requirements for 
shareholders of PFICs. These temporary regulations primarily affect 
shareholders of PFICs that do not currently file Form 8621, 
``Information Return by a Shareholder of a Passive Foreign Investment 
Company or Qualified Electing Fund,'' with respect to their PFIC 
interests. In addition, these temporary regulations provide guidance on 
an exception to the requirement for certain shareholders of foreign 
corporations to file Form 5471, ``Information Return of U.S. Persons 
with Respect to Certain Foreign Corporations.'' These regulations also 
update certain rules related to Form 5471 to take into account 
statutory changes. The text of these temporary regulations also serves 
as the text of the proposed regulations (REG-140974-11) set forth in 
the notice of proposed rulemaking on this subject in the Proposed Rules 
section of this issue of the Federal Register.

DATES: Effective Date: These regulations are effective on December 31, 
2013.
    Applicability Date: For dates of applicability, see Sec. Sec.  
1.1291-1T(k), 1.1291-9T(k)(3), 1.1298-1T(h), 1.6038-2T(m), and 1.6046-
1T(l)(3).

FOR FURTHER INFORMATION CONTACT: Barbara E. Rasch or Susan E. Massey at 
(202) 317-6934 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

A. Sections 1291 and 1298

    Sections 1291 through 1298 of the Internal Revenue Code (``Code'') 
set forth three tax regimes for shareholders that own stock of a PFIC: 
(i) the excess distribution rules under section 1291 (``section 1291 
regime''); (ii) the qualified electing fund (``QEF'') rules under 
section 1293; and (iii) the mark to market (``MTM'') rules under 
section 1296. In general, section 1291 imposes a special tax and 
interest charge on a United States person that is a shareholder of a 
PFIC and that receives an excess distribution (within the meaning of 
section 1291(b)) from a PFIC or recognizes gain derived from a 
disposition of stock in a PFIC that is treated as an excess 
distribution (within the meaning of section 1291(a)(2)). A shareholder 
that is subject to the QEF rules includes amounts in gross income under 
section 1293, and a shareholder that is subject to the MTM rules 
includes amounts in gross income under section 1296. Section 1298 sets 
forth special rules applicable to shareholders of PFICs, including 
attribution rules that treat a United States person as the owner of 
PFIC stock that is owned by another person (other than an individual). 
For instance, section 1298(a)(2) sets forth the attribution rules for 
ownership through a corporation, and section 1298(a)(3) sets forth the

[[Page 79603]]

attribution rules for ownership through a partnership, estate, or 
trust. In addition, section 1298(a)(1)(B) provides that, pursuant to 
regulations, stock owned (or treated as owned) by a United States 
person may be treated as owned by another United States person.
    On April 1, 1992, the Federal Register published proposed 
regulations (57 FR 11024) under sections 1291, 1293, 1295, and 1297 of 
the Code concerning, among other things, the taxation of shareholders 
of certain PFICs upon payment of distributions by such companies or 
upon disposition of the stock of such companies (``1992 proposed 
regulations''). The IRS and the Department of the Treasury (``Treasury 
Department'') received written comments on the 1992 proposed 
regulations and held a hearing on November 23, 1992.
    Subsequently, the Taxpayer Relief Act of 1997 (Public Law 105-34, 
111 Stat. 788) (``Taxpayer Relief Act'') modified certain aspects of 
the PFIC rules. Section 1122(a) of the Taxpayer Relief Act added the 
MTM regime under section 1296 to the Code, and section 1121 of the 
Taxpayer Relief Act added section 1297(d). Section 1297(d) provides 
that, in certain situations, a PFIC that is also a controlled foreign 
corporation (``CFC'') is not treated as a PFIC with respect to certain 
shareholders. However, section 1298(a)(2)(B) provides that a foreign 
corporation that would, but for the rules of section 1297(d), be a PFIC 
is treated as a PFIC with respect to its shareholders for purposes of 
determining whether the shareholders own an interest in any PFIC held 
by the foreign corporation.
    Section 521 of the Hiring Incentives to Restore Employment Act of 
2010 (Pub. L. 111-147, 124 Stat. 71) (``HIRE Act'') added new paragraph 
(f) to section 1298, effective March 18, 2010. Section 1298(f) requires 
a United States person that is a shareholder of a PFIC to file an 
annual report containing such information as the Secretary may require. 
The HIRE Act also amended section 6501(c)(8) (which was further amended 
by Public Law 111-226, 124 Stat. 2389) to extend the statute of 
limitations for assessment of tax for a shareholder that fails to 
comply with the reporting requirements of section 1298(f).
    In Notice 2010-34 (2010-1 CB 612 (April 26, 2010)) (see 26 CFR 
Sec.  601.601(d)(2)(ii)(b)), the IRS and the Treasury Department 
announced that they were developing further guidance regarding the 
reporting obligations under section 1298(f) and that PFIC shareholders 
that were not otherwise required to file Form 8621 prior to March 18, 
2010, would not be required to file an annual report under section 
1298(f) for taxable years beginning before March 18, 2010.
    In Notice 2011-55 (2011-29 CB 663 (July 18, 2011)) (see 26 CFR 
Sec.  601.601(d)(2)(ii)(b)), the IRS and the Treasury Department 
announced their intention to issue regulations under section 1298(f) 
and to release a revised Form 8621, modified to reflect the reporting 
requirements under section 1298(f). In addition, Notice 2011-55 
suspended the section 1298(f) reporting requirements until the release 
of the revised Form 8621 for PFIC shareholders that were not otherwise 
required to file Form 8621 under the then-current Instructions to Form 
8621. The notice stated that PFIC shareholders with Form 8621 reporting 
obligations as provided in the then-current Instructions to Form 8621 
were required to continue filing Form 8621 with an income tax or 
information return filed prior to the release of the revised Form 8621. 
Notice 2011-55 further provided that following the release of revised 
Form 8621, PFIC shareholders for which the filing of Form 8621 had been 
suspended under the notice would be required to attach Form 8621 for 
the suspended taxable year to their next income tax or information 
return required to be filed with the IRS. The notice also provided that 
a failure to furnish Form 8621 for a suspended taxable year could 
result in the extension of the statute of limitations for such year 
under section 6501(c)(8), and penalties could apply. However, since 
Notice 2011-55 was issued, the IRS and the Treasury Department have 
determined that it is not necessary for taxpayers to file a Form 8621 
under section 1298(f) for suspended taxable years. Accordingly, these 
regulations provide that PFIC shareholders are not required to file 
Form 8621 under section 1298(f) with respect to taxable years ending 
before December 31, 2013.
    This document contains amendments to 26 CFR part 1 under sections 
1291 and 1298. Although comments were received on the 1992 proposed 
regulations, none relate to the specific issues addressed in these 
temporary regulations. These temporary regulations generally adopt 
certain portions of the 1992 proposed regulations, some of which are 
revised to take into account statutory changes. This preamble discusses 
these revisions but does not discuss comments concerning other rules in 
the 1992 proposed regulations, which are beyond the scope of these 
temporary regulations. These temporary regulations also set forth the 
filing requirements under section 1298(f), including the time and 
manner for filing Form 8621 for taxable years ending on or after 
December 31, 2013.

B. Sections 6038 and 6046

    This document contains amendments to 26 CFR part 1 under sections 
6038 and 6046. Sections 6038 and 6046 set forth information return 
reporting requirements applicable to certain United States persons that 
own an interest in foreign corporations and certain United States 
persons that are officers and directors of the foreign corporations. 
These temporary regulations provide guidance on an exception to the 
requirement to file Form 5471 under sections 6038 and 6046 that is 
applicable to certain United States persons that own an interest in a 
foreign corporation under constructive ownership rules.
    In addition, these regulations take into account statutory changes 
in section 1012(i) of the Technical and Miscellaneous Revenue Act of 
1988 (Pub. L. 100-647, 102 Stat. 3342) and section 1146(a) of the 
Taxpayer Relief Act. The first statutory change relates to the 
requirement for persons treated as United States shareholders under 
section 953(c) to file an information return under section 6046. This 
requirement was added to the Code in 1988, shortly after section 953(c) 
was added to the Code by the Tax Reform Act of 1986 (Pub. L. 99-514, 
100 Stat. 2085). On April 17, 1991, the Federal Register published 
proposed regulations (56 FR 15540; INTL-939-86; REG-208289-86) under 
sections 953 and 6046 concerning, among other things, the requirements 
for persons treated as United States shareholders under section 953(c) 
to file an information return with respect to the CFC, and for certain 
United States persons that are officers and directors of such CFCs to 
file an information return (``1991 proposed regulations''). These 
regulations finalize Sec.  1.6046-1 of the 1991 proposed regulations 
(REG-116180-12; RIN 1545-BK91) without substantive changes. The other 
portions of the 1991 proposed regulations (REG-123286-13; RIN 1545-
BL63) remain in proposed form.
    The second statutory change relates to the ownership threshold for 
reporting set forth in section 6046. Prior to the modifications made by 
the Taxpayer Relief Act, the stock ownership threshold at which 
reporting was required under section 6046 was 5 percent. These 
regulations revise Sec.  1.6046-1 to reflect the 10 percent ownership 
threshold change that was

[[Page 79604]]

made in the Taxpayer Relief Act. In addition, these regulations revise 
the examples to reflect the 10 percent ownership threshold.
    Finally, these regulations revise Sec.  1.6046-1 to reflect the 
current name and form number of the information return required to be 
filed pursuant to section 6046.

Explanation of Provisions

A. Section 1291

1. Definition of Pedigreed QEF
    Prop. Treas. Reg. Sec.  1.1291-1(b)(2)(ii) of the 1992 proposed 
regulations defines the term pedigreed QEF, and Sec.  1.1291-
9(j)(2)(ii) contains a similar definition of the term. Section 1.1291-
1T(b)(2)(ii) adopts the 1992 proposed regulations' definition of 
pedigreed QEF without substantive modification to be consistent with 
the definition of pedigreed QEF in Sec.  1.1291-9(j)(2)(ii). The 
definition of pedigreed QEF in the 1992 proposed regulations is 
withdrawn in this issue of the Federal Register.
2. Definition of Section 1291 Fund
    Prop. Treas. Reg. Sec.  1.1291-1(b)(2)(v) of the 1992 proposed 
regulations defines the term section 1291 fund as an unpedigreed QEF or 
a nonqualified fund. These temporary regulations adopt the 1992 
proposed regulations' definition of section 1291 fund with some 
modifications to reflect the enactment of the MTM rules under section 
1296, which occurred after the 1992 proposed regulations were 
published. Under Sec.  1.1291-1T(b)(2)(v), a PFIC is a section 1291 
fund with respect to a shareholder unless the PFIC is a pedigreed QEF 
with respect to the shareholder or a section 1296 election is in effect 
with respect to the shareholder. The definition of section 1291 fund in 
the 1992 proposed regulations is withdrawn in this issue of the Federal 
Register.
3. Definitions of Shareholder and Indirect Shareholder
    Prop. Treas. Reg. Sec.  1.1291-1(b)(7) and (b)(8) of the 1992 
proposed regulations define the terms shareholder and indirect 
shareholder for purposes of section 1291. These definitions are cross-
referenced in the definition of shareholder provided in Sec.  1.1291-
9(j)(3). However, Sec.  1.1295-1(j) defines shareholder for QEF 
purposes, and section 1296(g) and Sec.  1.1296-1(e) provide a separate 
set of attribution rules for purposes of applying the MTM rules to 
United States persons that own an interest in a PFIC.
    These temporary regulations generally adopt the definition of 
shareholder provided in the 1992 proposed regulations. Under Sec.  
1.1291-1T(b)(7), the term shareholder means any United States person 
that owns stock of a PFIC directly or indirectly. For purposes of these 
regulations, a domestic partnership or an S corporation is treated as a 
shareholder of a PFIC only for purposes of the information reporting 
requirements of sections 1291 and 1298, including section 1298(f). In 
addition, these regulations provide that a domestic grantor trust is 
treated as a shareholder of a PFIC only for purposes of the information 
reporting requirement set forth at Sec.  1.1298-1T(b)(3)(i), which 
applies to domestic liquidating trusts and fixed investment trusts.
    These temporary regulations revise certain aspects of the 
definition of indirect shareholder in the 1992 proposed regulations and 
adopt other aspects of the definition without amendment. Section 
1.1291-1T(b)(8) defines the term indirect shareholder as a United 
States person that indirectly owns stock in a PFIC and provides rules 
for attributing ownership of PFIC stock through corporations, 
partnerships, S corporations, estates, and trusts. The rule in the 1992 
proposed regulations concerning ownership through a PFIC has been 
revised in Sec.  1.1291-1T(b)(8)(ii)(B) to incorporate a statutory 
change to section 1298(a)(2)(B) made in the Taxpayer Relief Act, which 
provides that section 1297(d) does not apply for purposes of 
determining whether a United States person owns a PFIC indirectly 
through a foreign corporation. Thus, in the case of a person that owns 
stock of a PFIC that is also a CFC, notwithstanding that under section 
1297(d) such corporation may not be treated as a PFIC with respect to 
certain shareholders, the foreign corporation is treated as a PFIC with 
respect to the shareholder for purposes of determining whether the 
shareholder owns an interest in any stock of a PFIC held by the foreign 
corporation.
    These temporary regulations make certain changes to the rules in 
the 1992 proposed regulations for attributing ownership of PFIC stock 
through partnerships, estates, and trusts. The 1992 proposed 
regulations generally provide that in the case of a partnership, S 
corporation, estate, or trust that directly or indirectly owns stock, 
the partners, shareholders, or beneficiaries (as the case may be) are 
considered to own a proportionate amount of such stock. These temporary 
regulations clarify that the attribution rules apply to both domestic 
and foreign partnerships, estates, and trusts.
    These temporary regulations also provide special rules for 
nongrantor trusts and grantor trusts. In particular, Treas. Reg. Sec.  
1.1291-1T(b)(8)(iii)(D) provides that if a foreign or domestic grantor 
trust directly or indirectly owns PFIC stock, a person that is treated 
under sections 671 through 679 as the owner of any portion of the trust 
that holds an interest in the stock is considered to own an interest in 
the stock held by that portion of the trust. In addition, Treas. Reg. 
Sec.  1.1291-1T(b)(8)(iii)(C) provides that, in general, if a foreign 
or domestic estate or nongrantor trust directly or indirectly owns PFIC 
stock, each beneficiary of the estate or trust is considered to own a 
proportionate amount of such stock. The cross-referenced notice of 
proposed rulemaking on this subject in the Proposed Rules section of 
this issue of the Federal Register requests comments on the 
determination of proportionate ownership by a beneficiary of PFIC stock 
held by a domestic or foreign estate or nongrantor trust. Until further 
guidance is provided on estate and trust attribution rules, 
beneficiaries of estates and nongrantor trusts that hold PFIC stock 
subject to the section 1291 regime should use a reasonable method to 
determine their ownership interests in a PFIC held by the estate or 
nongrantor trust. Moreover, until further guidance is provided, 
beneficiaries of estates and nongrantor trusts that are subject to the 
section 1291 regime with respect to PFIC stock held by the estate or 
nongrantor trust are exempt from section 1298(f) filing requirements 
for taxable years in which the beneficiary is not treated as receiving 
an excess distribution (within the meaning of section 1291(b)) or as 
recognizing gain that is treated as an excess distribution (under 
section 1291(a)(2)) with respect to the stock of the PFIC that the 
beneficiary is considered to own through the estate or trust. See, for 
example, Sec.  1.1298-1T(b)(3)(iii).
    These temporary regulations do not provide guidance on the 
application of section 1291 when an estate or nongrantor trust, or 
beneficiary thereof, receives, or is treated as receiving, an excess 
distribution (including an amount of gain treated as an excess 
distribution). Section 1291 and the principles of subchapter J must, 
however, be applied in a reasonable manner with respect to estates and 
trusts, and beneficiaries thereof, to preserve or trigger the tax and 
interest charge rules under section 1291. Accordingly, until further 
guidance is issued, the estate or trust, or the beneficiary thereof, 
must take excess

[[Page 79605]]

distributions into account under section 1291 in a reasonable manner, 
consistent with the general operating rules of subchapter J. It would 
be unreasonable for the shareholders of the section 1291 fund to take 
the position that neither the beneficiaries nor the estate or trust are 
subject to the tax and interest charge rules under section 1291. The 
definitions in the 1992 proposed regulations of shareholder and 
indirect shareholder are withdrawn in this issue of the Federal 
Register.
    As stated earlier, the term shareholder is defined in Sec.  1.1291-
9(j)(3) by cross-reference to the definitions of shareholder and 
indirect shareholder set forth in the 1992 proposed regulations. 
Certain other provisions, including Sec. Sec.  1.1291-10(a), 1.1297-
3(a), and 1.1298-3(a), cross-reference the definition of shareholder in 
Sec.  1.1291-9(j)(3). These temporary regulations include a definition 
of shareholder in Sec.  1.1291-9T(j)(3) that cross-references the 
definitions of shareholder and indirect shareholder in Sec.  1.1291-
1T(b)(7) and (b)(8). In addition, Sec.  1.1291-9(j)(3) is amended to 
cross-reference the definition of shareholder in Sec.  1.1291-9T(j)(3) 
rather than the definitions of shareholder and indirect shareholder in 
the 1992 proposed regulations. Accordingly, the Sec.  1.1291-1T(b) 
definition of shareholder applies for purposes of sections 1291 and 
1298(f) as well as other provisions that cross-reference Sec.  1.1291-
9(j)(3).

B. Section 1298(f)

1. General Filing Requirement Under Section 1298(f)
    Except as otherwise provided by the Secretary, section 1298(f) 
requires a United States person that is a shareholder of a PFIC to file 
an annual report containing such information as the Secretary may 
require. These temporary regulations generally require a United States 
person that is a shareholder of a PFIC to complete and file Form 8621 
(or successor form). The requirement to file Form 8621 under these 
temporary regulations applies to a shareholder that owns an interest in 
a PFIC at any time during the shareholder's taxable year, regardless of 
whether the PFIC has a taxable year ending within the shareholder's 
taxable year. These temporary regulations generally require the United 
States person that is at the lowest tier in a chain of ownership, and 
that is a shareholder (including an indirect shareholder) of a PFIC, to 
file an annual report on Form 8621. In addition, a United States person 
that owns PFIC stock through another United States person also is 
required to file an annual report in certain circumstances, including 
when that person is required to include an amount in income with 
respect to the PFIC or when that person is subject to tax under section 
1291 as a result of being treated as receiving an excess distribution 
or as recognizing gain that is treated as an excess distribution with 
respect to the PFIC. For example, if a United States citizen owns an 
interest in a domestic partnership, which, in turn, owns an interest in 
a PFIC, the domestic partnership is required to file an annual report 
because the domestic partnership is the United States person that is at 
the lowest tier in the chain of ownership. In addition, the United 
States citizen is required to file an annual report when such person is 
treated as receiving an excess distribution or as recognizing gain that 
is treated as an excess distribution with respect to the PFIC.
    In order to eliminate certain duplicative reporting obligations, 
these regulations provide an exception to the rule that requires a 
United States person that owns an interest in a PFIC through another 
United States person to submit an annual report. In particular, under 
Sec.  1.1298-1T(b)(2)(ii), a United States person that is required to 
include an amount in income only under the QEF or MTM rules with 
respect to PFIC stock held through other United States persons 
generally is not required to file an annual report under section 
1298(f) with respect to the PFIC if another shareholder through which 
the United States person holds the PFIC stock timely files an annual 
report under section 1298(f) with respect to the PFIC. This exception 
does not apply, however, if the United States person made a QEF 
election with respect to the PFIC and then transferred the shares of 
the PFIC to a domestic partnership or S corporation that did not itself 
make a QEF election with respect to the PFIC.
    The section 1298(f) filing requirements set forth in these 
temporary regulations generally apply to domestic estates, domestic 
nongrantor trusts, and United States persons that are treated under 
sections 671 through 679 as owners of any portion of foreign and 
domestic grantor trusts. In general, domestic estates and nongrantor 
trusts are required to file an annual report (subject to the exceptions 
provided in these regulations) under the rules generally applicable to 
United States persons, which are set forth in Sec.  1.1298-1T(b)(1) and 
(b)(2). United States persons that are treated as the owners of 
domestic and foreign grantor trusts that own PFIC stock generally are 
required to file an annual report under Sec.  1.1298-1T(b)(1) and 
(b)(2) (subject to the exceptions provided in these regulations).
    However, a United States person that is treated as the owner of any 
portion of a domestic liquidating trust described in Sec.  301.7701-
4(d) of this chapter and created pursuant to a court order issued in 
bankruptcy under Chapter 7 (11 U.S.C. 701 et seq.) of the Bankruptcy 
Code or pursuant to a confirmed plan under Chapter 11 (11 U.S.C. 1101 
et seq.) of the Bankruptcy Code, or of any portion of a domestic widely 
held fixed investment trust under Sec.  1.671-5, is not required to 
file Form 8621 under section 1298(f) and these regulations with respect 
to any PFICs owned by such trust. In such a case, Sec.  1.1298-
1T(b)(3)(i) provides that the trust itself must file Form 8621.
    Further, Sec.  1.1298-1T(b)(3)(ii) provides that the filing 
requirement under section 1298(f) does not apply to a United States 
person that is treated as the owner of any portion of a foreign grantor 
trust that is a foreign pension fund operated principally to provide 
pension or retirement benefits, if, pursuant to an income tax 
convention to which the United States is a party, income earned by the 
pension fund is taxed as income of the United States person only when 
and to the extent it is paid to, or for the benefit of, the United 
States person.
    United States persons that are beneficiaries of foreign estates and 
nongrantor trusts and that have made elections under section 1295 or 
1296 with respect to PFIC stock held by the estate or trust are 
required to file an annual report under these regulations (subject to 
the exceptions provided in these regulations) with respect to the PFIC. 
United States persons that are beneficiaries of domestic estates and 
nongrantor trusts that hold PFIC stock, which have made elections under 
section 1295 or 1296 with respect to the PFIC stock, generally are 
required to file an annual report under these regulations (subject to 
the exceptions provided in these regulations) with respect to the PFIC 
only if the estate or trust (and any other United States person in the 
chain of ownership) fails to file an annual report under these 
regulations. In addition, United States persons that are beneficiaries 
of domestic and foreign estates and nongrantor trusts are required to 
file an annual report under these regulations (subject to the 
exceptions provided in these regulations) for taxable years in which 
the beneficiary is treated as receiving an excess distribution (under 
section 1291(b)) or recognizing gain treated as an excess distribution 
(under section

[[Page 79606]]

1291(a)(2)) with respect to PFIC stock held by the estate or trust.
2. Exception for Tax Exempt Organizations
    A United States person that qualifies as a tax exempt organization 
under certain Code provisions may own an interest in a PFIC but may not 
be subject to tax under subchapter F of Subtitle A of the Code 
(addressing exempt organizations) with respect to the PFIC. In such a 
case, the United States person is not required to file an annual report 
under section 1298(f) and these regulations with respect to the PFIC. 
Specifically, Sec.  1.1298-1T(c)(1) provides that a shareholder that is 
an organization exempt under section 501(a), a state college or 
university described in section 511(a)(2)(B), a plan described in 
section 403(b) or 457(b), an individual retirement plan or annuity as 
defined in section 7701(a)(37), or a qualified tuition program 
described in section 529 or 530 is required to file an annual report 
under section 1298(f) with respect to a PFIC only if the income derived 
with respect to the PFIC would be taxable to the organization under 
subchapter F of Subtitle A of the Code.
3. $25,000 and $5,000 Exceptions
    A comment letter was received that requested the IRS and the 
Treasury Department to exercise the authority to promulgate exceptions 
to the filing requirements set forth under section 1298(f). These 
temporary regulations provide exceptions to the section 1298(f) filing 
requirements to address the concerns underlying the comment. Section 
1.1298-1T(c)(2)(i) provides exceptions to the requirement to file an 
annual report under section 1298(f) and these regulations for certain 
shareholders with respect to an interest owned in a PFIC for which the 
shareholder is subject to tax only under section 1291 (that is, no QEF 
or MTM election is in effect with respect to the shareholder). Under 
Sec.  1.1298-1T(c)(2)(i), this exception applies with respect to a PFIC 
only if: (i) The shareholder is not subject to tax under section 1291 
with respect to any excess distributions received from the PFIC, or 
gains derived with respect to the PFIC that are treated as excess 
distributions, during the taxable year of the shareholder (Sec.  
1.1298-1T(c)(2)(i)(B)); and (ii) either (A) the aggregate value of all 
PFIC stock owned by the shareholder at the end of the taxable year of 
the shareholder does not exceed $25,000, or (B) the PFIC stock is owned 
by the shareholder through another PFIC, and the value of the 
shareholder's proportionate share of the upper-tier PFIC's interest in 
the lower-tier PFIC does not exceed $5,000. The $25,000 threshold in 
Sec.  1.1298-1T(c)(2)(i)(A)(1) is increased to $50,000 for shareholders 
who file a joint return.
    These temporary regulations provide special rules for determining 
whether the $25,000 threshold is met in the case of indirect ownership. 
Under Sec.  1.1298-1T(c)(2)(ii), shareholders must take into account 
all PFIC stock owned directly or indirectly except for PFIC stock owned 
through another United States person that itself is a shareholder of 
the PFIC. Moreover, for these purposes, shareholders would not take 
into account PFIC stock owned through another PFIC because the value of 
the stock of the lower tier PFIC is reflected in the value of the upper 
tier PFIC stock.
    Shareholders are not required to obtain an appraisal in order to 
determine the value of PFIC stock. Section 1.1298-1T(c)(2)(iv) provides 
that shareholders may rely upon periodic account statements provided at 
least annually to determine the value of a PFIC unless the shareholder 
has reason to know that the statements do not reflect a reasonable 
estimate of the PFIC's value.

C. Time and Manner for Filing Form 8621

    Section 1298(f) was effective on March 18, 2010. As stated earlier, 
Notice 2010-34 provided that PFIC shareholders that were not otherwise 
required to file Form 8621 prior to March 18, 2010, would not be 
required to file an annual report under section 1298(f) for taxable 
years beginning before March 18, 2010. Furthermore, Notice 2011-55 
suspended the requirement to file an annual report under section 
1298(f) for taxable years beginning on or after March 18, 2010, for 
PFIC shareholders that were not otherwise required to file Form 8621 
under the then-current Instructions to Form 8621. Section 1.1298-
1T(c)(3) provides that United States persons are not required under 
section 1298(f) and these regulations to file an annual report with 
respect to a PFIC for a taxable year of the United States person ending 
before December 31, 2013. The rules described in Notice 2011-55 for 
suspended taxable years (as defined in Notice 2011-55) with respect to 
section 1298(f) and Form 8621 are no longer applicable. For taxable 
years ending on or after December 31, 2013, a shareholder that is 
required to file Form 8621 under these regulations with respect to a 
PFIC that it owns during a taxable year must attach Form 8621 to its 
Federal income tax return (or, if applicable, partnership or exempt 
organization return) for such taxable year. See Sec.  1.1298-1T(d). 
Although Notice 2011-55 is no longer applicable with respect to section 
1298(f) and Form 8621, these regulations do not affect Notice 2011-55 
with respect to filing requirements under section 6038D (relating to 
Form 8938).
    These temporary regulations provide that if a United States person 
is required to file Form 8621 with respect to more than one PFIC, the 
United States person must file a separate Form 8621 for each PFIC. 
However, United States persons that file a joint return may file a 
single Form 8621 with respect to a PFIC in which they jointly or 
individually own an interest. See Sec.  1.1298-1T(e).
    A revised Form 8621 has been released and the Instructions to the 
form will be modified to reflect the filing requirements under section 
1298(f) and these regulations.

D. Coordination With Other Filing Requirements

1. Coordination with Other PFIC Filing Requirements
    A shareholder may be required to file Form 8621 pursuant to 
provisions other than those under section 1298(f) and these temporary 
regulations. For example, Sec.  1.1295-1(f)(2)(i) requires a 
shareholder to file Form 8621 annually in connection with the 
shareholder's QEF election. Moreover, a shareholder must file Form 8621 
in order to make certain elections (such as a deemed sale election 
pursuant to Sec.  1.1297-3(b)(4)). Nothing in section 1298(f) or these 
regulations relieves a person from the obligation to file Form 8621 
under any other provision. If a shareholder is required to file Form 
8621 (or successor form) with respect to a PFIC pursuant to section 
1298(f) and these regulations, as well as another information reporting 
obligation, the shareholder may file a single Form 8621 that contains 
all of the required information.
2. Coordination With Section 6038D
    Section 6038D requires an individual who holds any interest in a 
specified foreign financial asset (as defined in section 6038D(b)) 
during any taxable year to provide information with respect to such 
asset. Certain United States persons that own an interest in a PFIC may 
be subject to the information reporting requirements of both sections 
1298(f) and 6038D with respect to the PFIC interest. The regulations 
under section 6038D provide guidance coordinating the two reporting 
requirements to eliminate duplicative reporting. See Sec. Sec.  
1.6038D-1T through 1.6038D-8T for rules relating to section

[[Page 79607]]

6038D reporting. Pursuant to those regulations, in order to avoid 
duplicative reporting of assets, a United States person is not required 
to report a PFIC under section 6038D if the person reports the PFIC on 
a timely filed Form 8621 and the person's report under section 6038D 
(on Form 8938) indicates, as provided on the form, that the person 
complied with its Form 8621 filing requirement with respect to the 
PFIC.

E. Form 5471 Filing Obligations

    Pursuant to sections 6038 and 6046, certain United States persons 
are required to file an information return on Form 5471, ``Information 
Return of U.S. Persons with Respect to Certain Foreign Corporations,'' 
with respect to their ownership in certain foreign corporations or 
because they are an officer or director of certain foreign 
corporations.
1. Constructive Ownership Exception
    Certain United States persons otherwise required to file Form 5471 
do not have to file if: (i) the United States person does not directly 
own an interest in the foreign corporation, (ii) the United States 
person would otherwise be required to furnish the information solely by 
reason of attribution of stock ownership from a United States person, 
and (iii) the person from whom the stock ownership is attributed 
furnishes all of the information required to be reported by the person 
to whom the stock ownership is attributed (``constructive ownership 
exception''). See Sec. Sec.  1.6038-2(j)(2) and 1.6046-1(e)(4)(iii). In 
addition, pursuant to Sec. Sec.  1.6038-2(j)(3) and 1.6046-1(e)(5), 
shareholders that are excepted from filing Form 5471 under the 
constructive ownership exception have been required to file a statement 
with their returns indicating that the requirement to provide 
information has been satisfied and identifying the return with which 
the information was or will be filed and the place of filing. The IRS 
believes that this statement is not necessary. Accordingly, these 
temporary regulations remove the requirement to file a statement in 
circumstances where a United States person qualifies for the 
constructive ownership exception. See Sec. Sec.  1.6038-2T(j)(3) and 
1.6046-1T(e)(5).
2. Section 953(c) Shareholders
    As discussed earlier, the requirement to file an information return 
for persons treated as United States shareholders under section 953(c), 
as well as certain United States persons that are officers and 
directors of the CFC, was added to the Code in 1988. The 1991 proposed 
regulations addressed these new filing requirements.
    These regulations finalize Sec.  1.6046-1(a)(2) and (c) to reflect 
the additional filing requirement imposed on United States persons 
treated as section 953(c) shareholders, and officers and directors of 
CFCs that have United States persons treated as section 953(c) 
shareholders, without any substantive changes from the 1991 proposed 
regulations.
3. Changes To Conform the Section 6046 Regulations to the Code and 
Current Information Return Form
    Section 6046(a)(1)(B) through (D) mandates the filing of an 
information return by United States persons that: (i) acquire 10 
percent or more of the stock of a foreign corporation; (ii) acquire 
stock, which, when added to any stock owned on the date of acquisition, 
equals 10 percent or more of the stock of the foreign corporation; 
(iii) are treated as a United States shareholder under section 953(c) 
with respect to a foreign corporation; or (iv) become a United States 
person while owning 10 percent or more of the stock of a foreign 
corporation. As discussed earlier, prior to the modifications made by 
the Taxpayer Relief Act, the stock ownership threshold at which 
reporting was required was 5 percent. Section 1.6046-1 was published in 
1962, when the stock ownership threshold was 5 percent. These 
regulations revise Sec.  1.6046-1 to reflect the 10 percent ownership 
threshold change that was made in the Taxpayer Relief Act. These 
regulations also revise the examples to reflect the 10 percent 
ownership threshold.
    In addition, several paragraphs of Sec.  1.6046-1 reference ``Form 
959'', Return by an Officer, Director, or Shareholder with Respect to 
the Organization or Reorganization of a Foreign Corporation and 
Acquisition of Stock. Form 959 was replaced in 1983 by Form 5471. These 
regulations modify Sec.  1.6046-1 to reference Form 5471 (or subsequent 
form), rather than Form 959, and remove Sec.  1.6046-1(f)(4), which 
described Form 959.

Effect on Other Documents

    Notice 2010-34 (2010-1 CB 612) is obsolete as of December 31, 2013. 
Notice 2011-55 (2011-29 CB 663) is partially obsolete as of December 
31, 2013. Notice 2011-55 is only obsolete with respect to section 
1298(f) and Form 8621. Notice 2011-55 continues to be in effect with 
respect to section 6038D and Form 8938.

Special Analyses

    It has been determined that this Treasury decision is not a 
significant regulatory action as defined in Executive Order 12866, as 
supplemented by Executive Order 13653. Therefore, a regulatory 
assessment is not required. It also has been determined that section 
553(b) and (d) of the Administrative Procedure Act (5 U.S.C. chapter 5) 
does not apply to these regulations. For applicability of the 
Regulatory Flexibility Act (5 U.S.C. chapter 6), please refer to the 
cross-referenced notice of proposed rulemaking published elsewhere in 
this issue of the Federal Register. Pursuant to section 7805(f), these 
regulations have been submitted to the Chief Counsel for Advocacy of 
the Small Business Administration for comment on their impact on small 
business.

Drafting Information

    The principal authors of these regulations are Barbara E. Rasch and 
Susan E. Massey of the Office of Associate Chief Counsel 
(International). However, other personnel from the IRS and the Treasury 
Department participated in their development.

List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 is amended by adding 
entries in numerical order as follows:

    Authority: 26 U.S.C. 7805 * * *
    Sections 1.1291-1T, 1.1291-9, 1.1291-9T, and 1.1298-1T also 
issued under 26 U.S.C. 1298(a) and (g) * * *
    Section 1.1298-1T also issued under 26 U.S.C. 1298(f) and (g) * 
* *
    Section 1.6038-2T also issued under 26 U.S.C. 6038(d) * * *
    Section 1.6046-1T also issued under 26 U.S.C. 6046(b) * * *


0
Par. 2. Section 1.1291-0T is added to read as follows:


Sec.  1.1291-0T  Passive foreign investment company--table of contents 
(temporary).

    This section lists the table of contents for Sec. Sec.  1.1291-1T 
and 1.1291-9T.


Sec.  1.1291-1T  Taxation of United States persons that are 
shareholders of section 1291 funds (temporary).

    (a) through (b)(2)(i) [Reserved].
    (ii) Pedigreed QEF.
    (b)(2)(iii) and (iv) [Reserved].

[[Page 79608]]

    (v) Section 1291 fund.
    (3) through (6) [Reserved].
    (7) Shareholder.
    (8) Indirect shareholder.
    (i) In general.
    (ii) Ownership through a corporation.
    (A) Ownership through a non-PFIC foreign corporation.
    (B) Ownership through a PFIC.
    (C) Ownership through a domestic corporation.
    (iii) Ownership through pass-through entities.
    (A) Partnerships.
    (B) S Corporations.
    (C) Estates and nongrantor trusts.
    (D) Grantor trusts.
    (c) through (j) [Reserved].
    (k) Effective/applicability dates.


Sec.  1.1291-9T  Deemed dividend election (temporary).

    (a) through (j)(2) [Reserved].
    (3) Shareholder.
    (k) Effective/applicability date.

0
Par. 3. Section 1.1291-1T is added to read as follows:


Sec.  1.1291-1T  Taxation of United States persons that are 
shareholders of section 1291 funds (temporary).

    (a) through (b)(2)(i) [Reserved].
    (ii) Pedigreed QEF. A PFIC is a pedigreed QEF with respect to a 
shareholder if the PFIC has been a QEF with respect to the shareholder 
for all taxable years during which the corporation was a PFIC that are 
included wholly or partly in the shareholder's holding period of the 
PFIC stock.
    (b)(2)(iii) and (iv) [Reserved].
    (v) Section 1291 fund. A PFIC is a section 1291 fund with respect 
to a shareholder unless the PFIC is a pedigreed QEF with respect to the 
shareholder or a section 1296 election is in effect with respect to the 
shareholder.
    (3) through (6) [Reserved].
    (7) Shareholder. A shareholder is a United States person that 
directly owns stock of a PFIC (a direct shareholder), or that is an 
indirect shareholder (as defined in section 1298(a) and paragraph 
(b)(8) of this section). For purposes of sections 1291 and 1298, a 
domestic partnership or S corporation (as defined in section 1361) is 
not treated as a shareholder of a PFIC except for purposes of any 
information reporting requirements, including the requirement to file 
an annual report under section 1298(f). In addition, to the extent that 
a person is treated under sections 671 through 678 as the owner of a 
portion of a domestic trust, the trust is not treated as a shareholder 
of a PFIC with respect to PFIC stock held by that portion of the trust, 
except for purposes of the information reporting requirements of Sec.  
1.1298-1T(b)(3)(i) (imposing an information reporting requirement on 
domestic liquidating trusts and fixed investment trusts).
    (8) Indirect shareholder--(i) In general. An indirect shareholder 
of a PFIC is a United States person that indirectly owns stock of a 
PFIC. A person indirectly owns stock when it is treated as owning stock 
of a corporation owned by another person, including another United 
States person, under this paragraph (b)(8). In applying this paragraph 
(b)(8), the determination of a person's indirect ownership is made on 
the basis of all the facts and circumstances in each case; the 
substance rather than the form of ownership is controlling, taking into 
account the purpose of sections 1291 through 1298.
    (ii) Ownership through a corporation--(A) Ownership through a non-
PFIC foreign corporation. A person that directly or indirectly owns 50 
percent or more in value of the stock of a foreign corporation that is 
not a PFIC is considered to own a proportionate amount (by value) of 
any stock owned directly or indirectly by the foreign corporation.
    (B) Ownership through a PFIC. A person that directly or indirectly 
owns stock of a PFIC is considered to own a proportionate amount (by 
value) of any stock owned directly or indirectly by the PFIC. Section 
1297(d) shall not apply in determining whether a corporation is a PFIC 
for purposes of this paragraph (b)(8)(ii)(B).
    (C) Ownership through a domestic corporation. Except as provided in 
paragraph (b)(8)(iii)(B) of this section, if stock of a section 1291 
fund is not treated as owned indirectly by a United States person under 
this paragraph (b)(8) (determined without regard to this paragraph 
(b)(8)(ii)(C)), but would be treated as owned by a United States person 
if paragraph (b)(8)(ii)(A) of this section applied to domestic 
corporations as well as foreign corporations, then the stock is 
considered owned by the United States person.
    (iii) Ownership through pass-through entities--(A) Partnerships. If 
a foreign or domestic partnership directly or indirectly owns stock, 
the partners of the partnership are considered to own such stock 
proportionately in accordance with their ownership interests in the 
partnership.
    (B) S Corporations. If an S corporation directly or indirectly owns 
stock, each S corporation shareholder is considered to own such stock 
proportionately in accordance with the shareholder's ownership interest 
in the S corporation.
    (C) Estates and nongrantor trusts. If a foreign or domestic estate 
or nongrantor trust (other than an employees' trust described in 
section 401(a) that is exempt from tax under section 501(a)) directly 
or indirectly owns stock, each beneficiary of the estate or trust is 
considered to own a proportionate amount of such stock. For purposes of 
this paragraph (b)(8)(iii)(C), a nongrantor trust is any trust or 
portion of a trust that is not treated as owned by one or more persons 
under sections 671 through 679.
    (D) Grantor trusts. If a foreign or domestic trust directly or 
indirectly owns stock, a person that is treated under sections 671 
through 679 as the owner of any portion of the trust that holds an 
interest in the stock is considered to own the interest in the stock 
held by that portion of the trust.
    (c) (1) and (2) [Reserved].
    (3) [Reserved]. For further guidance, see Sec.  1.1291-1(c)(3).
    (d) [Reserved].
    (e) [Reserved]. For further guidance, see Sec.  1.1291-1(e).
    (f) through (i) [Reserved].
    (j) [Reserved]. For further guidance, see Sec.  1.1291-1(j).
    (k) Effective/applicability dates. Paragraphs (b)(2)(ii), 
(b)(2)(v), (b)(7), and (b)(8) of this section apply to taxable years of 
shareholders ending on or after December 31, 2013.
    (l) Expiration date. The applicability of paragraphs (b)(2)(ii), 
(b)(2)(v), (b)(7), and (b)(8) of this section expires on December 30, 
2016.

0
Par. 4. Section 1.1291-9 is amended by revising paragraph (j)(3) and 
adding paragraph (k)(3) to read as follows:


Sec.  1.1291-9  Deemed dividend election.

* * * * *
    (j) * * *
    (3) [Reserved]. For further guidance see Sec.  1.1291-9T(j)(3).
    (k) * * *
    (3) [Reserved]. For further guidance see Sec.  1.1291-9T(k)(3).

0
Par. 5. Section 1.1291-9T is added to read as follows:


Sec.  1.1291-9T  Deemed dividend election (temporary).

    (a) through (j)(2) [Reserved]. For further guidance see Sec.  
1.1291-9(a) through (j)(2).
    (3) Shareholder. A shareholder is a United States person that is a 
shareholder as defined in Sec.  1.1291-1T(b)(7) or an indirect 
shareholder as defined in Sec.  1.1291-1T(b)(8).
    (k) Effective/applicability date--(1) [Reserved]. For further 
guidance see Sec.  1.1291-9(k)(1).

[[Page 79609]]

    (2) [Reserved]. For further guidance see Sec.  1.1291-9(k)(2).
    (3) Paragraph (j)(3) of this section applies to taxable years of 
shareholders ending on or after December 31, 2013.
    (l) Expiration date. The applicability of paragraph (j)(3) of this 
section expires on December 30, 2016.

0
Par. 6. Section 1.1298-0T is added to read as follows:


Sec.  1.1298-0T  Passive foreign investment company--table of contents 
(temporary).

    This section lists the table of contents for Sec.  1.1298-1T.


Sec.  1.1298-1T  Section 1298(f) annual reporting requirements for 
United States persons that are shareholders of a passive foreign 
investment company (temporary).

    (a) Overview.
    (b) Requirement to file.
    (1) General rule.
    (2) Additional requirement to file for certain indirect 
shareholders.
    (i) General rule.
    (ii) Exception to indirect shareholder reporting for certain QEF 
inclusions and MTM inclusions.
    (3) Special rules for estates and trusts.
    (i) Domestic liquidating trusts and fixed investment trusts.
    (ii) Foreign pension funds.
    (iii) Beneficiaries of foreign estates and trusts.
    (c) Exceptions.
    (1) Exception if shareholder is a tax exempt entity.
    (2) Exception if aggregate value of shareholder's PFIC stock is 
$25,000 or less, or value of shareholder's indirect PFIC stock is 
$5,000 or less.
    (i) General rule.
    (ii) Determination of the $25,000 threshold in the case of indirect 
ownership.
    (iii) Application of the $25,000 exception to shareholders who file 
a joint return.
    (iv) Reliance on periodic account statements.
    (3) Exception for taxable years ending before December 31, 2013.
    (d) Time and manner for filing.
    (e) Separate annual report for each PFIC.
    (1) General rule.
    (2) Special rule for shareholders who file a joint return.
    (f) Coordination rule.
    (g) Examples.
    (h) Effective/applicability date.

0
Par. 7. Section 1.1298-1T is added to read as follows:


Sec.  1.1298-1T  Section 1298(f) annual reporting requirements for 
United States persons that are shareholders of a passive foreign 
investment company (temporary).

    (a) Overview. This section provides rules regarding the reporting 
requirements under section 1298(f) applicable to a United States person 
that is a shareholder (as defined in Sec.  1.1291-1T(b)(7)) of a 
passive foreign investment company (PFIC). Paragraph (b) of this 
section provides the section 1298(f) annual reporting requirements 
generally applicable to United States persons. Paragraph (c) of this 
section sets forth exceptions to reporting for certain shareholders 
that are tax exempt entities, that own PFIC stock with an aggregate 
value of $25,000 or less, or that own certain PFIC stock with a value 
of $5,000 or less, and provides an exception to reporting for all 
shareholders for taxable years ending before December 31, 2013. 
Paragraph (d) of this section provides rules regarding the time and 
manner of filing the annual report. Paragraph (e) of this section sets 
forth the requirement to file a separate annual report with respect to 
each PFIC. Paragraph (f) of this section coordinates the requirement to 
file an annual report under section 1298(f) with the requirement to 
file an annual report under other provisions of the Internal Revenue 
Code (Code). Paragraph (g) of this section sets forth examples 
illustrating the application of this section.
    (b) Requirement to file--(1) General rule. Except as otherwise 
provided in this section, a United States person that is a shareholder 
of a PFIC must complete and file Form 8621, ``Information Return by a 
Shareholder of a Passive Foreign Investment Company or Qualified 
Electing Fund'' (or successor form), under section 1298(f) and these 
regulations for the PFIC if, during the shareholder's taxable year, the 
shareholder--
    (i) Directly owns stock of the PFIC;
    (ii) Is an indirect shareholder under Sec.  1.1291-1T(b)(8) that 
holds any interest in the PFIC through one or more entities, each of 
which is foreign; or
    (iii) Is an indirect shareholder under Sec.  1.1291-
1T(b)(8)(iii)(D) that is treated under sections 671 through 678 as the 
owner of any portion of a trust described in section 7701(a)(30)(E) 
that owns, directly or indirectly through one or more entities, each of 
which is foreign, any interest in the PFIC.
    (2) Additional requirement to file for certain indirect 
shareholders--(i) General rule. Except as otherwise provided in this 
section, an indirect shareholder that owns an interest in a PFIC 
through one or more United States persons also must file Form 8621 (or 
successor form) with respect to the PFIC under section 1298(f) and 
these regulations if, during the indirect shareholder's taxable year, 
the indirect shareholder is--
    (A) Treated as receiving an excess distribution (within the meaning 
of section 1291(b)) with respect to the PFIC;
    (B) Treated as recognizing gain that is treated as an excess 
distribution (under section 1291(a)(2)) as a result of a disposition of 
the PFIC;
    (C) Required to include an amount in income under section 1293(a) 
with respect to the PFIC (QEF inclusion);
    (D) Required to include an amount in income under section 1296(a) 
with respect to the PFIC (MTM inclusion); or
    (E) Required to report the status of a section 1294 election with 
respect to the PFIC (see Sec.  1.1294-1T(h)).
    (ii) Exception to indirect shareholder reporting for certain QEF 
inclusions and MTM inclusions. Except as otherwise provided in this 
paragraph (b)(2)(ii), the filing requirements under paragraph 
(b)(2)(i)(C) and (D) of this section do not apply with respect to a 
PFIC owned by an indirect shareholder described in paragraph 
(b)(2)(i)(C) or (b)(2)(i)(D) of this section if another shareholder 
through which the indirect shareholder owns an interest in the PFIC 
timely files Form 8621 (or successor form) with respect to the PFIC 
under paragraph (b)(1) or (b)(2) of this section. However, the 
exception in this paragraph (b)(2)(ii) does not apply with respect to a 
PFIC owned by an indirect shareholder described in paragraph 
(b)(2)(i)(C) of this section that owns the PFIC through a domestic 
partnership or S corporation if the domestic partnership or S 
corporation does not make a qualified electing fund election with 
respect to the PFIC (see Sec.  1.1293-1(c)(2)(ii), addressing QEF stock 
transferred to a pass through entity that does not make a section 1295 
election).
    (3) Special rules for estates and trusts--(i) Domestic liquidating 
trusts and fixed investment trusts. A United States person that is 
treated under sections 671 through 678 as the owner of any portion of a 
trust described in section 7701(a)(30)(E) that owns, directly or 
indirectly, any interest in a PFIC is not required under section 
1298(f) and these regulations to file Form 8621 (or successor form) 
with respect to the PFIC if the trust is either a domestic liquidating 
trust under Sec.  301.7701-4(d) of this chapter created pursuant to a 
court order issued in a bankruptcy under Chapter 7 (11 U.S.C. 701 et 
seq.) of the Bankruptcy Code or a confirmed plan under Chapter 11 (11 
U.S.C. 1101 et seq.) of the Bankruptcy Code, or a widely held fixed 
investment trust under Sec.  1.671-5. Such a trust is treated as a 
shareholder for purposes of section 1298(f) and these regulations, and 
thus, except as otherwise provided

[[Page 79610]]

in this section, the trust is required under section 1298(f) and these 
regulations to file Form 8621 (or successor form) with respect to the 
PFIC as provided in paragraphs (b)(1) and (b)(2) of this section.
    (ii) Foreign pension funds. A United States person that is treated 
as the owner of any portion of a trust described in section 
7701(a)(31)(B) that owns, directly or indirectly, any interest in a 
PFIC is not required under section 1298(f) and these regulations to 
file Form 8621 (or successor form) with respect to the PFIC if the 
foreign trust is a foreign pension fund (including a foreign pension 
fund that is an individual retirement plan) operated principally to 
provide pension or retirement benefits, and, pursuant to an income tax 
convention to which the United States is a party, income earned by the 
pension fund may be taxed as the income of the owner of the trust only 
when and to the extent the income is paid to, or for the benefit of, 
the owner.
    (iii) Beneficiaries of foreign estates and trusts. A United States 
person that is considered to own an interest in a PFIC because it is a 
beneficiary of an estate described in section 7701(a)(31)(A) or a trust 
described in section 7701(a)(31)(B) that owns, directly or indirectly, 
stock of a PFIC, and that has not made an election under section 1295 
or 1296 with respect to the PFIC, is not required under section 1298(f) 
and these regulations to file Form 8621 (or successor form) with 
respect to the stock of the PFIC that it is considered to own through 
the estate or trust if, during the beneficiary's taxable year, the 
beneficiary is not treated as receiving an excess distribution (within 
the meaning of section 1291(b)) or as recognizing gain that is treated 
as an excess distribution (under section 1291(a)(2)) with respect to 
the stock.
    (c) Exceptions--(1) Exception if shareholder is a tax exempt 
entity. A shareholder that is an organization exempt under section 
501(a) because it is described in section 501(c), 501(d), or 401(a), a 
state college or university described in section 511(a)(2)(B), a plan 
described in section 403(b) or 457(b), an individual retirement plan or 
annuity as defined in section 7701(a)(37), or a qualified tuition 
program described in section 529 or 530 is not required under section 
1298(f) and these regulations to file Form 8621 (or successor form) 
with respect to a PFIC unless the income derived with respect to the 
PFIC stock would be taxable to the organization under subchapter F of 
Subtitle A of the Code.
    (2) Exception if aggregate value of shareholder's PFIC stock is 
$25,000 or less, or value of shareholder's indirect PFIC stock is 
$5,000 or less--(i) General rule. A shareholder is not required under 
section 1298(f) and these regulations to file Form 8621 (or successor 
form) with respect to a section 1291 fund (as defined in Sec.  1.1291-
1T(b)(2)(v)) for a shareholder's taxable year if--
    (A) On the last day of the shareholder's taxable year,
    (1) The value of all PFIC stock owned directly or indirectly under 
section 1298(a) and Sec.  1.1291-1T(b)(8) by the shareholder is $25,000 
or less; or
    (2) The section 1291 fund stock is indirectly owned by the 
shareholder under section 1298(a)(2)(B) and Sec.  1.1291-
1T(b)(8)(ii)(B), and the value of the section 1291 fund stock 
indirectly owned by the shareholder is $5,000 or less;
    (B) The shareholder is not treated as receiving an excess 
distribution (within the meaning of section 1291(b)) with respect to 
the section 1291 fund during the taxable year or as recognizing gain 
treated as an excess distribution under section 1291(a)(2) as the 
result of a disposition of the section 1291 fund during the taxable 
year; and
    (C) An election under section 1295 has not been made to treat the 
section 1291 fund as a qualified electing fund with respect to the 
shareholder.
    (ii) Determination of the $25,000 threshold in the case of indirect 
ownership. For purposes of determining the value of stock held by a 
shareholder for purposes of paragraph (c)(2)(i)(A)(1) of this section, 
the shareholder must take into account the value of all PFIC stock 
owned directly or indirectly under section 1298(a) and Sec.  1.1291-
1T(b)(8), except for PFIC stock that is--
    (A) Owned through another United States person that itself is a 
shareholder of the PFIC (including a domestic partnership or S 
corporation treated as a shareholder of a PFIC for purposes of 
information reporting requirements applicable to a shareholder); or
    (B) Owned through a PFIC under section 1298(a)(2)(B) and Sec.  
1.1291-1T(b)(8)(ii)(B).
    (iii) Application of the $25,000 exception to shareholders who file 
a joint return. In the case of a joint return, the exception described 
in paragraph (c)(2)(i)(A)(1) of this section shall apply if the value 
of all PFIC stock owned directly or indirectly (as determined under 
section 1298(a), Sec.  1.1291-1T(b)(8), and paragraph (c)(2)(ii) of 
this section) by both spouses is $50,000 or less, and all of the other 
applicable requirements of paragraph (c)(2) are met.
    (iv) Reliance on periodic account statements. A shareholder may 
rely upon periodic account statements provided at least annually to 
determine the value of a PFIC unless the shareholder has actual 
knowledge or reason to know based on readily accessible information 
that the statements do not reflect a reasonable estimate of the PFIC's 
value.
    (3) Exception for taxable years ending before December 31, 2013. A 
United States person is not required under section 1298(f) and these 
regulations to file an annual report with respect to a PFIC for a 
taxable year of the United States person ending before December 31, 
2013.
    (d) Time and manner for filing. A United States person required 
under section 1298(f) and these regulations to file Form 8621 (or 
successor form) with respect to a PFIC must attach the form to its 
Federal income tax return (or, if applicable, partnership or exempt 
organization return) for the taxable year to which the filing 
obligation relates on or before the due date (including extensions) for 
the filing of the return. In the case of any failure to report 
information that is required to be reported pursuant to section 1298(f) 
and these regulations, the time for assessment of tax will be extended 
pursuant to section 6501(c)(8).
    (e) Separate annual report for each PFIC--(1) General rule. If a 
United States person is required under section 1298(f) and these 
regulations to file Form 8621 (or successor form) with respect to more 
than one PFIC, the United States person must file a separate Form 8621 
(or successor form) for each PFIC.
    (2) Special rule for shareholders who file a joint return. United 
States persons that file a joint return may file a single Form 8621 (or 
successor form) with respect to a PFIC in which they jointly or 
individually own an interest.
    (f) Coordination rule. A United States person that is a shareholder 
of a PFIC may file a single Form 8621 (or successor form) with respect 
to the PFIC that contains all of the information required to be 
reported pursuant to section 1298(f) and these regulations and any 
other information reporting requirements or election rules.
    (g) Examples. The following examples illustrate the rules of this 
section:

    Example 1. General requirement to file. (i) Facts. In 2013, J, a 
United States citizen, directly owns an interest in Partnership X, a 
domestic partnership, which, in turn, owns an interest in A Corp, 
which is a PFIC. In addition, J directly owns an interest in

[[Page 79611]]

Partnership Y, a foreign partnership, which, in turn, owns an 
interest in A Corp. Neither J nor Partnership X has made a qualified 
electing fund election under section 1295 or a mark to market 
election under section 1296 with respect to A Corp. As of the last 
day of 2013, the value of Partnership X's interest in A Corp is 
$200,000, and the value of J's proportionate share of Partnership 
Y's interest in A Corp is $100,000. During 2013, J is not treated as 
receiving an excess distribution or recognizing gain treated as an 
excess distribution with respect to A Corp. Partnership X timely 
files a Form 8621 under section 1298(f) and paragraph (b)(1) of this 
section with respect to A Corp for 2013.
    (ii) Results. J is the first United States person in the chain 
of ownership with respect to J's interest in A Corp held through 
Partnership Y. Under paragraph (b)(1) of this section, J must file a 
Form 8621 under section 1298(f) with respect to J's interest in A 
Corp held through Partnership Y because J is an indirect shareholder 
of A Corp under Sec.  1.1291-1T(b)(8) that holds PFIC stock through 
a foreign entity (Partnership Y), and there are no other United 
States persons in the chain of ownership. The fact that Partnership 
X filed a Form 8621 with respect to A Corp does not relieve J of the 
obligation under paragraph (b)(1) of this section to file a Form 
8621 with respect to J's interest in A Corp held through Partnership 
Y.
    Example 2. Application of the $25,000 exception. (i) Facts. In 
2013, J, a United States citizen, directly owns stock of A Corp, B 
Corp, and C Corp, all of which were PFICs during 2013. As of the 
last day of 2013, the value of J's interests was $5,000 in A Corp, 
$10,000 in B Corp, and $4,000 in C Corp. J timely filed an election 
under section 1295 to treat A Corp as a qualified electing fund for 
the first year in which A Corp qualified as a PFIC, and a mark-to-
market election under section 1296 with respect to the stock of B 
Corp. J did not make a qualified electing fund election under 
section 1295 or a mark to market election under section 1296 with 
respect to C Corp. J did not receive an excess distribution or 
recognize gain treated as an excess distribution in respect of C 
Corp during 2013.
    (ii) Results. Under paragraph (b)(1) of this section, J must 
file separate Forms 8621 with respect to A Corp and B Corp for 2013. 
However, J is not required to file a Form 8621 with respect to C 
Corp because J owns, in the aggregate, PFIC stock with a value of 
less than $25,000 on the last day of J's taxable year, C Corp is not 
subject to a qualified electing fund election or mark to market 
election with respect to J, and J did not receive an excess 
distribution in respect of C Corp or recognize gain treated as an 
excess distribution in respect of C Corp during 2013. Therefore, J 
qualifies for the $25,000 exception in paragraph (c)(2) of this 
section with respect to C Corp.
    Example 3. Application of the $25,000 exception to indirect 
shareholder. (i) Facts. E, a United States citizen, directly owns an 
interest in Partnership X, a domestic partnership. Partnership X, in 
turn, directly owns an interest in A Corp and B Corp, both of which 
are PFICs. Partnership X timely filed an election under section 1295 
to treat B Corp as a qualified electing fund for the first year in 
which B Corp qualified as a PFIC. In addition, E directly owns an 
interest in C Corp, which is a PFIC. C Corp, in turn, owns an 
interest in D Corp, which is a PFIC. E has not made a qualified 
electing fund election under section 1295 or a mark to market 
election under section 1296 with respect to A Corp, C Corp, or D 
Corp. As of the last day of 2013, the value of Partnership X's 
interest in A Corp is $30,000, the value of Partnership X's interest 
in B Corp is $30,000, the value of E's indirect interest in A Corp 
is $10,000, the value of E's indirect interest in B Corp is $10,000, 
the value of E's interest in C Corp is $20,000, and the value of C 
Corp's interest in D Corp is $10,000. During 2013, E did not receive 
an excess distribution, or recognize gain treated as an excess 
distribution, with respect to A Corp, C Corp, or D Corp. Partnership 
X timely files Forms 8621 under section 1298(f) and paragraph (b)(1) 
of this section with respect to A Corp and B Corp for 2013.
    (ii) Results. Under paragraph (b) of this section, E does not 
have to file a Form 8621 under section 1298(f) and these regulations 
with respect to A Corp because E is not the United States person 
that is at the lowest tier in the chain of ownership with respect to 
A Corp and E did not receive an excess distribution or recognize 
gain treated as an excess distribution with respect to A Corp. 
Furthermore, under paragraph (b)(2)(ii) of this section, E does not 
have to file a Form 8621 under section 1298(f) and these regulations 
with respect to B Corp because Partnership X timely filed a Form 
8621 with respect to B Corp. In addition, under paragraph 
(c)(2)(ii)(A) of this section, E does not take into account the 
value of A Corp and B Corp, which E owns through Partnership X, in 
determining whether E qualifies for the $25,000 exception. Further, 
under paragraph (c)(2)(ii)(B) of this section, E does not take into 
account the value of D Corp in determining whether E qualifies for 
the $25,000 exception. Therefore, even though E is the United States 
person that is at the lowest tier in the chain of ownership with 
respect to C Corp and D Corp, E does not have to file a Form 8621 
with respect to C Corp or D Corp because E qualifies for the $25,000 
exception set forth in paragraph (c)(2)(i)(A)(1) of this section.
    Example 4. Indirect shareholder's requirement to file. (i) 
Facts. The facts are the same as in Example 3, except that the value 
of E's interest in C Corp is $30,000 and the value of E's 
proportionate share of C Corp's interest in D Corp is $3,000.
    (ii) Results. The results are the same as in Example 3 with 
respect to the requirement to file a Form 8621 under section 1298(f) 
and these regulations with respect to A Corp and B Corp. However, 
under the facts in this Example 4, E does not qualify for the 
$25,000 exception under paragraph (c)(2)(i)(A)(1) of this section 
because the value of E's interest in C Corp is $30,000. Accordingly, 
E must file a Form 8621 under section 1298(f) and these regulations 
with respect to C Corp. However, E does qualify for the $5,000 
exception under paragraph (c)(2)(i)(A)(2) of this section with 
respect to D Corp, and thus does not have to file a Form 8621 with 
respect to D Corp.

    (h) Effective/applicability date. Except as provided in paragraph 
(c)(3) of this section, this section applies to taxable years of 
shareholders ending on or after December 31, 2013. Paragraph (c)(3) of 
this section applies to taxable years of shareholders ending before 
December 31, 2013.
    (i) Expiration date. This section expires on December 30, 2016.

0
Par. 8. Section 1.6038-2 is amended by revising paragraph (j)(3) to 
read as follows:


Sec.  1.6038-2  Information returns required of United States persons 
with respect to annual accounting periods of certain foreign 
corporations beginning after December 31, 1962.

* * * * *
    (j) * * *
    (3) [Reserved]. For further guidance, see Sec.  1.6038-2T(j)(3).
* * * * *

0
Par. 9. Section 1.6038-2T is added to read as follows:


Sec.  1.6038-2T  Information returns required of United States persons 
with respect to annual accounting periods of certain foreign 
corporations (temporary).

    (a) through (j)(2). [Reserved]. For further guidance, see Sec.  
1.6038(a) through (j)(2).
    (3) Statement required. Any United States person required to 
furnish information under this section with his return who does not do 
so by reason of the provisions of paragraph (j)(1) of this section 
shall file a statement with his income tax return indicating that such 
liability has been (or will be) satisfied and identifying the return 
with which the information was or will be filed and the place of 
filing.
    (k) through (l). [Reserved]. For further guidance, see Sec.  
1.6038(k) through (l).
    (m) Effective/applicability date. Except as otherwise provided, 
this section applies with respect to information for annual accounting 
periods beginning on or after June 21, 2006. Paragraphs (k)(1) and 
(k)(5) Examples 3 and 4 of this section apply June 21, 2006. Paragraph 
(d) of this section applies to taxable years ending after April 9, 
2008. Paragraph (j)(3) of this section applies to returns filed on or 
after December 31, 2013.
    (n) Expiration date. Paragraph (j)(3) of this section expires on or 
before December 30, 2016.

0
Par. 10. Section 1.6046-1 is amended by:
0
1. Paragraph (a)(1) is amended by removing the language ``Form 959'' 
and adding ``Form 5471 (or subsequent form)'' in its place.

[[Page 79612]]

0
2. Paragraph (f)(1) is amended by removing the language ``5'' and 
adding ``10'' in its place.
0
3. Revising paragraph (a)(2)(i).
0
4. Revising Examples 2 through 4 of paragraph (a)(3).
0
5. Revising paragraph (c).
0
6. Revising paragraph (e)(5).
0
7. Revising paragraph (f)(4).
0
8. Redesignating paragraph (l) as paragraph (l)(1).
0
9. Adding paragraph (l)(2).
    The additions and revisions read as follows:


Sec.  1.6046-1  Returns as to organizations or reorganizations of 
foreign corporations and as to acquisitions of their stock.

    (a) * * *
    (2) * * * (i) Requirement of return. Each United States citizen or 
resident who is at any time after January 1, 1963, an officer or 
director of a foreign corporation shall make a return on Form 5471 
setting forth the information described in paragraph (a)(2)(ii) of this 
section with respect to each United States person who, during the time 
such citizen or resident is such an officer or director--
    (a) Acquires (whether in one or more transactions) outstanding 
stock of such corporation which has, or which when added to any such 
stock then owned by him (excluding any stock owned by him on January 1, 
1963, if on that date he owned 10 percent or more in value of such 
stock) has, a value equal to 10 percent or more in value of the 
outstanding stock of such foreign corporation;
    (b) Acquires (whether in one or more transactions) an additional 10 
percent or more in value of the outstanding stock of such foreign 
corporation; or
    (c) Is not described in paragraph (a)(2)(i)(a) or (b) of this 
section, and who, at any time after January 1, 1987, is treated as a 
United States shareholder under section 953(c) with respect to such 
foreign corporation.
* * * * *
    (3) * * *

    Example 2. (i) Facts. A, a United States citizen, is, on January 
1, 2014, a director of M, a foreign corporation. X, on January 1, 
2014, is a United States person owning 4% in value of the 
outstanding stock of M Corporation. On July 1, 2014, X acquires 4% 
in value of the outstanding stock of M Corporation and on September 
1, 2014, he acquires an additional 4% in value of such stock.
    (ii) Results. The July 1, 2014, transaction does not give rise 
to liability to file a return; however, A must file a return as a 
result of the September 1, 2014, transaction because X's holdings 
now exceed 10%.
    Example 3. (i) Facts. The facts are the same as in Example 2 
and, on September 15, 2014, X acquires an additional 8% in value of 
the outstanding stock of M Corporation. (X's total holdings are now 
20%.) On November 1, 2014, X acquires an additional 4% in value of 
the outstanding stock of M Corporation.
    (ii) Results. The September 15, 2014, transaction does not give 
rise to liability to file a return since X has not acquired 10% in 
value of the outstanding stock of M Corporation since A last became 
liable to file a return. However, A must file a return as a result 
of the November 1, 2014, transaction because X has now acquired an 
additional 10% in value of the outstanding stock of M Corporation.
    Example 4. (i) Facts. The facts are the same as in Examples 2 
and 3 and, in addition, B, a United States citizen, becomes an 
officer of M Corporation on September 10, 2014.
    (ii) Results. B is not required to file a return either as a 
result of the facts set forth in Example 2 or as a result of the 
September 15, 2014, transaction described in Example 3. However, B 
is required to file a return as a result of the November 1, 2014, 
transaction described in Example 3 because X has acquired an 
additional 10% in value of the outstanding stock of M Corporation 
while B is an officer or director.
* * * * *
    (c) Returns required of U.S. persons when liability to file arises 
after January 1, 1963--(1) U.S. persons required to file. A return on 
Form 5471, containing the information required by paragraph (c)(4) of 
this section, shall be made by each U.S. person when at any time after 
January 1, 1963:
    (i) Such person acquires (whether in one or more transactions) 
outstanding stock of such foreign corporation which has, or which when 
added to any such stock then owned by him (excluding any stock owned by 
him on January 1, 1963, if on that date he owned 10 percent or more in 
value of such stock) has, a value equal to 10 percent or more in value 
of the outstanding stock of such foreign corporation;
    (ii) Such person, having already acquired the interest referred to 
in paragraph (b) of this section or in paragraph (c)(1)(i) of this 
section--
    (a) Acquires (whether in one or more transactions) an additional 10 
percent or more in value of the outstanding stock of such foreign 
corporation;
    (b) Owns 10 percent or more in value of the outstanding stock of 
such foreign corporation when such foreign corporation is reorganized 
(as defined in paragraph (f)); or
    (c) Disposes of sufficient stock in such foreign corporation to 
reduce his interest to less than 10 percent in value of the outstanding 
stock of such foreign corporation; or
    (iii) Such person is, at any time after January 1, 1987, treated as 
a United States shareholder under section 953(c) with respect to a 
foreign corporation.
    (2) Examples. The provisions of paragraph (c)(1) of this section 
may be illustrated by the following examples:

    Example 1. (i) Facts. On January 15, 2014, A, a United States 
person, acquires 10% in value of the outstanding stock of M, a 
foreign corporation.
    (ii) Results. A must file a return under the provisions of 
paragraph (c)(1) of this section.
    Example 2. (i) Facts. On January 1, 2014, B, a United States 
person, owns 4% in value of the outstanding stock of M, a foreign 
corporation. On February 1, 2015, B acquires an additional 6% in 
value of the outstanding stock of M Corporation.
    (ii) Results. B is not required to file a return for 2014 under 
the provisions of this section because he does not own 10% or more 
in value of the outstanding stock of M Corporation. B must file a 
return for 2015 under the provisions of paragraph (c)(1) of this 
section.
    Example 3. (i) Facts. On January 1, 2014, C, a United States 
person, owns 12% in value of the outstanding stock of M, a foreign 
corporation. On February 1, 2014, C acquires an additional 4% in 
value of the outstanding stock of M Corporation in a transaction not 
involving a reorganization.
    (ii) Results. C is not required to file a return under the 
provisions of paragraph (c)(1) of this section with respect to the 
acquisition of the additional 4% of M Corporation.
    Example 4. (i) Facts. The facts are the same as in Example 3 
except that, in addition, on April 1, 2014, C acquires 4% in value 
of the outstanding stock of M Corporation in a transaction not 
involving a reorganization. (C's total holdings are now 20%.) On May 
1, 2014, C acquires 2% in value of the outstanding stock of M 
Corporation.
    (ii) Results. C is not required to file a return under the 
provisions of paragraph (c)(1) of this section as a result of the 
April 1, 2014, acquisition because he has not acquired 10% or more 
in value of the outstanding stock of M Corporation since he last 
became liable to file a return. C must file a return under the 
provisions of paragraph (c)(1) of this section as a result of the 
May 1, 2014, acquisition because C acquired 10% of the outstanding 
stock of M Corporation during 2014.
    Example 5. (i) Facts. On June 1, 2014, D, a United States 
person, owns 24% in value of the outstanding stock of M, a foreign 
corporation. Also, on June 1, 2014, M Corporation is reorganized 
and, as a result of such reorganization, D owns only 12% of the 
outstanding stock of such foreign corporation.
    (ii) Results. D must file a return under the provisions of 
paragraph (c)(1) of this section.
    Example 6. (i) Facts. The facts are the same as in Example 5 
except that, in addition, on November 1, 2015, D donates 4% of the 
outstanding stock of M Corporation to a charity.
    (ii) Results. Since D has disposed of sufficient stock to reduce 
his interest in M Corporation to less than 10% in value of the 
outstanding stock of such corporation, D must file a return under 
the provisions of paragraph (c)(1) of this section.

    (3) Shareholders who become U.S. persons. A return on Form 5471,

[[Page 79613]]

containing the information required by paragraph (c)(4) of this 
section, shall be made by each person who at any time after January 1, 
1963, becomes a U.S. person while owning 10 percent or more in value of 
the outstanding stock of such foreign corporation.
    (4) Information required to be shown on return--(i) In general. The 
return on Form 5471, required to be filed by persons described in 
paragraph (c)(1) or (3) of this section, shall set forth the same 
information as is required by the provisions of paragraph (b) of this 
section except that where such provisions require information with 
respect to January 1, 1963, such information shall be furnished with 
respect to the date on which liability arises to file the return 
required under this paragraph.
    (ii) Additional information. In addition to the information 
required under paragraph (c)(4)(i) of this section, the following 
information shall also be furnished in the return required under this 
paragraph:
    (a) The date on or after January 1, 1963, if any, on which such 
shareholder (or shareholders) last filed a return under this section 
with respect to the corporation;
    (b) If a return is filed by reason of becoming a United States 
person, the date the shareholder became a United States person;
    (c) If a return is filed by reason of the disposition of stock, the 
date and method of such disposition and the person to whom such 
disposition was made; and
    (d) If a return is filed by reason of the organization or 
reorganization of the foreign corporation on or after January 1, 1963, 
the following information with respect to such organization or 
reorganization:
    (1) A statement showing a detailed list of the classes and kinds of 
assets transferred to the foreign corporation including a description 
of the assets (such as a list of patents, copyrights, stock, 
securities, etc.), the fair market value of each asset transferred 
(and, if such asset is transferred by a United States person, its 
adjusted basis), the date of transfer, the name, address, and 
identifying number, if any, of the owner immediately prior to the 
transfer, and the consideration paid by the foreign corporation for 
such transfer;
    (2) A statement showing the assets transferred and the notes or 
securities issued by the foreign corporation, the name, address, and 
identifying number, if any, of each person to whom such transfer or 
issue was made, and the consideration paid to the foreign corporation 
for such transfer or issue; and
    (3) An analysis of the changes in the corporation's surplus 
accounts occurring on or after January 1, 1963.
    (iii) Exclusion of information previously furnished. In any case 
where any identical item of information required to be filed under this 
paragraph by a shareholder with respect to a foreign corporation has 
previously been furnished by such shareholder in any return made in 
accordance with the provisions of this section, such shareholder may 
satisfy the requirements of this paragraph by filing Form 5471, 
identifying such item of information, the date furnished, and stating 
that it is unchanged.
* * * * *
    (e) * * *
    (5) [Reserved]. For further guidance see Sec.  1.6046-1T(e)(5).
* * * * *
    (f) * * *
    (4) [Reserved].
* * * * *
    (l) Effective/applicability date--(1) * * *
    (2) Paragraph (c)(1)(iii) of this section applies to taxable years 
ending after December 31, 2013.

0
Par. 11. Section 1.6046-1T is added to read as follows:


Sec.  1.6046-1T  Returns as to organizations or reorganizations of 
foreign corporations and as to acquisitions of their stock (temporary).

    (a)(1) through (e)(4). [Reserved]. For further guidance, see Sec.  
1.6046-1(a)(1) through (e)(4).
    (5) Persons excepted from furnishing items of information. Any 
person required to furnish any item of information under paragraph (b) 
or (c) of this section with respect to a foreign corporation may, if 
such item of information is furnished by another person having an equal 
or greater stock interest (measured in terms of value of such stock) in 
such foreign corporation, satisfy such requirement by filing a 
statement with his return on Form 5471 indicating that such liability 
has been satisfied and identifying the return in which such item of 
information was included. This paragraph (e)(5) does not apply to 
persons excepted from filing a return by reason of the provisions of 
paragraph (e)(4) of this section.
    (f)(1) through (l)(2). [Reserved]. For further guidance, see Sec.  
1.6046-1(f)(1) through (l)(2).
    (3) Paragraph (e)(5) of this section applies to returns filed on or 
after December 31, 2013. See paragraph (e)(5) of Sec.  1.6046-1, as 
contained in 26 CFR part 1 revised as of April 1, 2012, for returns 
filed before December 31, 2013.
    (m) Expiration date. Paragraph (e)(5) of this section expires on or 
before December 30, 2016.

John Dalrymple,
Deputy Commissioner for Services and Enforcement.

    Approved: December 12, 2013.
 Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. 2013-30847 Filed 12-30-13; 8:45 am]
BILLING CODE 4830-01-P