Treasury and the IRS published final regulations on 25 January under Section 958 on determining stock ownership and proposed regulations regarding the treatment of domestic partnerships and S corporations that own stock of passive foreign investment companies (PFICs) and their domestic partners and shareholders.
Action item: Taxpayers should review new regulations with respect to their direct and indirect foreign investments to determine whether and, if appropriate, how this latest guidance might impact the PFIC status of any such investment. The 2022 Proposed Regulations invite comments on a number of issues, and businesses that would be affected by the new rules should consider providing comments during the comment period, which ends April 25, 2022.