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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15716
Experience:  15years with H & R Block. Divisional leader, Instructor
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Is it possible to make a "Deemed Sale + QEF" election Year 2013.

Customer Question

Hello, is it possible to make a "Deemed Sale + QEF" election for Tax Year 2013. I have recently identified that I own a PFIC. The PFIC published its first Annual Information Statement for the period covering July 1, 2013 to June 30, 2014. If possible I'd like to make a purging election--i.e., deemed sale--on an amended 2013 return along with an election to treat the PFIC as a QEF beginning on July 1, 2013. If this is possible , what are the steps that I need to take? (Form 8621 appears to be unclear on this issue.)
Submitted: 2 years ago.
Category: Tax
Expert:  Robin D. replied 2 years ago.
Hello,What you want to do is not a simple process.Generally, a shareholder must make the election to be treated as a QEF by the due date, including extensions, for filing the shareholder's income tax return for the first taxable year to which the election will apply. A shareholder may make a QEF election for a taxable year after the election due date (a retroactive election), only if:The shareholder has preserved its right to make a retroactive election under the protective statement regime orThe shareholder obtains the permission of the IRS to make a retroactive election under the consent regimeYou said you did not know you had a PFIC so the first option my apply.Under the protective statement regime, a shareholder may preserve the ability to make a retroactive election if the shareholder:Reasonably believed, as of the due date for making the QEF election, that the foreign corporation was not a PFIC for its taxable year that ended during that year (retroactive election year);Filed a Protective Statement with respect to the foreign corporation, applicable to the retroactive election year, in which the shareholder describes the basis for its reasonable belief;Extended, in the Protective Statement, the periods of limitations on the assessment of taxes under the PFIC rules for all taxable years to which the protective statement applies; andComplied with the other terms and conditions of the protective statements. The Protective Statement must be attached to the shareholder's tax return for the shareholder's first taxable year to which the statement will apply.Regulations section 1.1295-3(c) has the actual content listed that must be in the statement.I can give you the steps above but I would strongly suggest you have your own tax adviser assist you in completing this.​
Customer: replied 2 years ago.
Thank you for the quick reply. Form 8621 indicates that a "Deemed Sale" election can be made by filing an amended return within 3 years of the due date (including extensions). However, it sounds as if you are saying that it does not matter in this case because the QEF election would have needed to have been filed by the due date for the 2013 Taxes, assuming that the protective statement/consent regime does not apply.
Customer: replied 2 years ago.
Is that correct?
Expert:  Robin D. replied 2 years ago.
That is correct generally. I advised that the the retroactive treatment can be made based on the specifics.Barring the 4 items I listed above you would need to file a request for a private letter ruling.