The US IRS today released proposed regulations under sections 1291, 1297, and 1298 on the determination of ownership in a passive foreign investment company (PFIC) within the meaning of section 1297(a) and the treatment of certain income received or accrued by a foreign corporation and assets held by a foreign corporation for purposes of section 1297.
The regulations provide guidance regarding when a foreign corporation is a qualifying insurance corporation (QIC) under section 1297(f) of the Code and the amounts of income and assets that a QIC excludes from passive income and assets pursuant to section 1297(b)(2)(B) (“PFIC insurance exception”) for purposes of section 1297(a).
The regulations also clarify the application and scope of certain rules that determine whether a United States person that directly or indirectly holds stock in a PFIC is treated as a shareholder of the PFIC, and whether a foreign corporation is a PFIC.
The IRS today also withrew 2015 proposed reguation on the PFIC insrance exemption and proposed new rules in this area.
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