IRS to Amend Rules for PFIC Stock Owners in Tax Exempts, Accounts

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The Internal Revenue Service and Treasury Department are planning to amend the definition of shareholder in the Section 1291 rules to provide that a U.S. person that owns stock of a passive foreign investment company through a tax-exempt organization or account isn't treated as a shareholder of a PFIC.
Notice 2014-28 , released April 14, said that Treasury and the IRS believe that the application of the PFIC rules to a U.S. person treated as owning stock of a PFIC through a tax-exempt organization or account would be inconsistent with the tax policies underlying the PFIC rules and the tax provisions applicable to tax-exempt organizations and accounts.
Tax code Section 1291 imposes a special tax and interest charge on a U.S. person that is a shareholder of a PFIC and receives an excess distribution from the PFIC or recognizes gain derived from a disposition of the PFIC that is treated as an excess distribution.

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