Daily Tax Update - December 30, 2013: IRS Issues Guidance on PFICs

IRS ISSUES GUIDANCE ON PFICs:  Today, the IRS issued temporary regulations [TD 9650] and proposed regulations [REG-140974-11] that provide guidance on determining ownership of a passive foreign investment company (PFIC) and on the annual filing requirements for shareholders of PFICs. These temporary regulations primarily affect shareholders of PFICs that do not currently file Form 8621, “Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund,” with respect to their PFIC interests. In addition, these temporary regulations provide guidance on an exception to the requirement for certain shareholders of foreign corporations to file Form 5471, “Information Return of U.S. Persons with Respect to Certain Foreign Corporations.” These regulations also update certain rules related to Form 5471 to take into account statutory changes. The text of these temporary regulations also serves as the text of the proposed regulations (REG- 140974-11) set forth in the notice of proposed rulemaking on this subject in the Federal Register.

MISCELLANEOUS GUIDANCE RELEASED:

Rev. Proc. 2014-12 establishes the requirements (the Safe Harbor) under which the Internal Revenue Service (the Service) will not challenge partnership allocations of § 47 rehabilitation credits by a partnership to its partners.