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BTAX OnPoint: Passive Foreign Investment Company Rules

Dec. 7, 2020, 11:58 PM

The IRS issued final and proposed passive foreign investment company rules impacting U.S. shareholders of certain foreign corporations.

The agency released both sets of guidance on Dec. 4. The final regulations (T.D. 9936) adopt with some modifications the 2019 proposed version and additional guidance on related topics is included in the 2020 proposed regulations.

The PFIC regime was originally enacted in 1986 to deter U.S. persons from deferring U.S. income taxation by investing in foreign corporations with largely passive income or assets.

A foreign corporation qualifies as a PFIC if either 75% or more ...