The US IRS, on Sept. 10, announced that it will amend reg. sec. 1.1298-1T of the passive foreign investment company (PFIC) regulations to provide that, generally, a US person that holds PFIC stock that is marked-to-market under a non-section 1296 mark-to-market regime, such as under section 475(f), will not be subject to the reporting requirements of reg. sec. 1.1298-1T with respect to that stock.
The exception will not apply in a taxable year in which the U.S. person is required to apply section 1291 pursuant to coordination rules of §1.1291-1(c)(4)(ii). The exception will also not be available to the extent PFIC stock held by a US person is not in fact marked-to-market, such as when it is treated as held for investment or as a hedge.
In addition, the IRS said the regs will provide that a shareholder that is not subject to section 1298(f) information reporting with respect to PFIC stock that is marked-to-market under a non-section 1296 mark-to-market regime is not required to take the value of the stock into account for purposes of determining whether it exceeds the relevant threshold under §1.1298-1T(c)(2)(i)(A)(1) or §1.1298-1T(c)(2)(iii).
The IRS said will not assert that the period of limitation is extended for any taxable year of any shareholder of PFIC stock that relies on the notice prior to the issuance of final regulations. For details, see Notice 2014-51
