Assumes no QEF or mark-to-market elections have been made. Complete a separate calculation for each block of stock in which you have a different holding period.
Gain / Excess Distribution: $100,000 (Form 8621, Part V, Line 15f)
| Year | Days | Alloc'd Excess Distr. |
Tax Rate | Def'd Tax Amt. | Interest Charge |
Comment |
|---|---|---|---|---|---|---|
| 2011 | 27 | 548 | 35.0% | — | — | Pre-PFIC year (no deferred tax or interest) |
| 2012 | 366 | 7,428 | 35.0% | — | — | Pre-PFIC year (no deferred tax or interest) |
| 2013 | 365 | 7,408 | 39.6% | — | — | Pre-PFIC year (no deferred tax or interest) |
| 2014 | 365 | 7,408 | 39.6% | — | — | Pre-PFIC year (no deferred tax or interest) |
| 2015 | 365 | 7,408 | 39.6% | 2,934 | 1,920 | --- |
| 2016 | 366 | 7,428 | 39.6% | 2,942 | 1,749 | --- |
| 2017 | 365 | 7,408 | 39.6% | 2,934 | 1,564 | --- |
| 2018 | 365 | 7,408 | 37.0% | 2,741 | 1,271 | --- |
| 2019 | 365 | 7,408 | 37.0% | 2,741 | 1,062 | --- |
| 2020 | 366 | 7,428 | 37.0% | 2,749 | 918 | --- |
| 2021 | 365 | 7,408 | 37.0% | 2,741 | 809 | --- |
| 2022 | 365 | 7,408 | 37.0% | 2,741 | 656 | --- |
| 2023 | 365 | 7,408 | 37.0% | 2,741 | 426 | --- |
| 2024 | 366 | 7,428 | 37.0% | 2,749 | 192 | --- |
| 2025 | 151 | 3,065 | 37.0% | — | — | Current year (no deferred tax or interest) |
| Totals | 100,000 | 28,013 | 10,567 | |||
Attach a schedule like this to Form 8621.
Form 8621, Part V, Line 16b: The excess distribution allocated to the current year (2025) is $3,065. The excess distribution allocated to the Pre-PFIC years is $22,793. The sum of these two amounts, $25,858, is included on Form 8621, Part V, Line 16b and included as "Other Income" on Form 1040, Schedule 1, Line 8z.
Form 8621, Part V, Line 16c: The deferred tax amount of $28,013 is included on Form 8621, Part V, Line 16c
Form 8621, Part V, Line 16d: Although foreign tax credits may be allowed with respect to PFIC distributions in computing the deferred tax amount, it appears that no foreign tax credits are allowed for individuals recognizing gains on sales of PFIC stock in computing the deferred tax amount. Thus, Form 8621, Part V, Line 16d should be zero, and Line 16e should be the same as Line 16c.
A portion of the gain may be allocated to the current year and to the pre-PFIC years ($25,858). To the extent foreign income taxes were imposed on this portion of the gain, those foreign income taxes can be claimed as passive foreign tax credits on Form 1116. However, this portion of the gain is foreign source income (and can be included on Form 1116) only if the individual seller is resident in a foreign country and a foreign income tax of at least 10% is paid on the gain. Code §865(a) and (g)(2). Individuals living in the U.S. generally do not have foreign source income from gains on sales of personal property (such as stock).
Form 8621, Part V, Line 16e: The amount included on Form 8621, Line 16e ($28,013) should be included as part of the total for Form 1040, line 16. Check box 3 on line 16 and enter "1291TAX" in the entry space for that box.
Form 8621, Part V, Line 16f: The amount interest on Form 8621, Line 16f should be $10,567. This amount should also be included on Form 1040, Schedule 2, Line 17p.
Form 8960, Line 6 The full amount of the gain / excess distribution is [potentially] subject to the net investment income tax. The full amount of the gain ($100,000) should be included as a positive adjustment on Line 6 of Form 8960.
Section 1291 Computation for PFIC Distributions
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