PFIC Happens: A §1291 Deep Dive

PFICs are one of the most complex areas in international tax—and when the default rules under IRC §1291 apply, the real challenge is not identifying the issue, but performing the calculation correctly. The excess distribution regime requires practitioners to reconstruct holding periods, allocate income across multiple years, and apply interest charges that can significantly increase the tax liability.

This program is a hands-on, practical deep dive into §1291. Participants will work through the mechanics of the excess distribution rules, including allocation across the holding period and the computation of tax and interest. The program also addresses key elections, including qualified electing fund (QEF) and mark-to-market elections, and the consequences of failing to make timely elections.

Special attention is given to real-world practitioner challenges, including incomplete information, prior-year errors, and determining the best path forward when a client is already subject to the §1291 regime. The session emphasizes step-by-step application and practitioner decision-making, translating complex rules into a structured approach that can be applied in practice.

This is not an introductory overview—this is a working session for practitioners who need to calculate, analyze, and resolve PFIC issues under §1291.

NASBA Intermediate level program
PREREQUESITE 2-3 experience working with PFIC calculations, or attendance at our basic PFIC program (available online)

Learning Objectives (NASBA)
Upon completion of this program, participants will be able to:
-Identify when a foreign investment is classified as a PFIC and determine when the §1291 regime applies.
-Compute tax under the excess distribution rules, including allocation of income across the holding period.
-Calculate the applicable interest charge associated with §1291 inclusions.
-Evaluate the impact of QEF and mark-to-market elections and determine when such elections are beneficial.
-Analyze common PFIC compliance issues and apply practical strategies for reporting on Form 8621.

2 IRS CE/2 NASBA CPE*

Only available for TPP unlimited CE subscribers.

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*Self-Study recording not available for NASBA CPE credit.

IRS Program #: 7Q3WU-T-00891-26
CTEC Course #: 6248-CE-00237