2026-01-20
A foreign corporation is a PFIC if it satisfies a passive income test or a passive asset test. If no elections are made, the PFIC is a "Section 1291 Fund". Gains on sales of Section 1291 Funds, and "excess" distributions made by Section 1291 Funds, are taxed as ordinary income, plus an interest charge.
The Section 1291 Fund calculations can be quite complicated. Today we published two new web pages that perform these calculations. The first web page performs the calculations for sales of PFICs. The second web page performs the calculations for distributions by PFICs.
To perform the sale calculations, you typically need to know the purchase date, the purchase price, the sale date, and the sale price. In the unusual case where it wasn't a PFIC for your entire holding period, you also need to know the first year it was a PFIC.
To perform the distribution calculations, you typically need to know the purchase date, the distribution date, the distribution amount, the foreign taxes withheld, and total distributions for the prior 3 years. Again, in the unusual case where it wasn't a PFIC for your entire holding period, you also need to know the first year it was a PFIC.
We hope that these calculators will help in completing Form 8621. However, these are some complicated rules. Please let us know if you see anything that seems incorrect.
DISCLAIMER: Use these calculators at your own risk.