First Look: US publishes final and proposed PFIC regulations

The US on December 4 issued final (T.D. 9936) and proposed regulations (REG-111950-20) relating to passive foreign investment companies (PFICs)

The final regulations address the determination of whether a foreign corporation is treated as a PFIC and the scope of rules that determine whether a United States person that indirectly holds stock in a PFIC is treated as a shareholder of the PFIC.

The proposed regs provide guidance regarding PFIC insurance exception. They also propose rules addressing the treatment of qualified improvement property under the alternative depreciation system for purposes of calculating qualified business asset investment under the global intangible low-taxed income and the foreign-derived intangible income provisions.

According to the Service, the final regulations retain the basic approach and structure of proposed regulations issued on July 11, 2019, (REG-105474-18) and portions of proposed regulations issued on October 2, 2019, (REG-104223-18), though some revisions are made.