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ARTICLE · 11 DECEMBER 2020

IRS Issues Final PFIC Ownership Regulations

Stradley Ronon Stevens & Young
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The IRS has issued final regulations (TD 9936) regarding how to determine if a foreign corporation is a passive foreign investment company (PFIC) and the application and scope of certain rules...

United StatesGovernment, Public Sector
Christopher Scarpa
Christopher Scarpa
Jacquelyn Gordon
Jacquelyn Gordon

IRS Issues Final PFIC Ownership Regulations

The IRS has issued final regulations (TD 9936) regarding how to determine if a foreign corporation is a passive foreign investment company (PFIC) and the application and scope of certain rules that determine whether a U.S. person that indirectly holds stock in a PFIC is treated as a shareholder of the PFIC.

On July 11, 2019, the IRS published proposed regulations (REG-105474-18) under Sections 1291, 1297, and 1298 (see our prior coverage  here) in the Federal Register (84 FR 33120) (the “proposed regulations” or “2019 proposed regulations”). In addition, on Oct. 2, 2019, the IRS published proposed regulations (REG-104223-18) (see our prior coverage  here) relating to the repeal of Section 958(b)(4) by the 2017 Tax Cuts and Jobs Act (TCJA) (the “section 958 proposed regulations”). As in effect before its repeal, Section 958(b)(4) provided that Section 318(a)(3)(A), (B), and (C) (providing for downward attribution) was

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