E7-20489. Guidance on Passive Foreign Investment Company (PFIC) Purging Elections; Correction

AGENCY:

Internal Revenue Service (IRS), Treasury.

ACTION:

Correcting amendment.

SUMMARY:

This document contains a correction to final regulations (TD 9360) that were published in the Federal Register on Thursday, September 27, 2007 (72 FR 54820) providing certain elections for taxpayers that continue to be subject to the PFIC excess distribution regime of section 1291 of the Internal Revenue Code even though the foreign corporation in which they own stock is no longer treated as a PFIC under section 1297(a) or (e) of the Code.

DATES:

This correction is effective October 17, 2007.

FOR FURTHER INFORMATION CONTACT:

Paul J. Carlino at [phone] (not a toll-free number).

SUPPLEMENTARY INFORMATION:

Background

The final regulations (TD 9360) that are the subject of this correction are under sections 1291, 1297 and 1298 of the Internal Revenue Code.

Need for Correction

As published, final regulations (TD 9360) contain an error that may prove to be misleading and is in need of clarification.

List of Subjects in 26 CFR Part 1

• Income taxes
• Reporting and recordkeeping requirements

Correction of Publication

Accordingly, 26 CFR part 1 is corrected by making the following amendments:

PART 1—INCOME TAXES

Paragraph 1. The authority citation for part 1 continues to read, in part, as follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.1297-3 is amended by revising the fourth sentence of paragraph (e)(5)(ii) Example.(i) to read as follows:

§ 1.1297-3

Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a section 1297(e) PFIC.

* * * * *

(e) * * *

(5) * * *

(ii) * * *

Example.

* * *

(i) * * * In years 1993 and 1994, FC did not satisfy either the income or the asset test of section 1297(a). * * *

* * * * *

LaNita Van Dyke,

Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel (Procedure and Administration).