Section 1.1297-0 - Table of contentsThis section contains a listing of the headings for §§ 1.1297-1 , 1.1297-2 , 1.1297-3 , 1.1297-4 , 1.1297-5 , and 1.1297-6 .
§ 1.1297-1 Definition of passive foreign investment company.(b) Dividends included in gross income. (c) Passive income. (1) Foreign personal holding company income. (ii) Determination of gross income or gain on a net basis for certain items of foreign personal holding company income.(iii) Amounts treated as dividends.(3) Passive treatment of dividends and distributive share of partnership income.(4) Exception for certain interest, dividends, rents, and royalties received from a related person. (iii) Allocation of interest.(iv) Allocation of dividends. (B) Dividends paid out of current earnings and profits.(C) Dividends paid out of accumulated earnings and profits.(v) Allocation of rents and royalties.(vi) Determination of whether amounts are received or accrued from a related person.(vii) Allocation of distributive share of income from related partnership.(d) Asset test. (1) Calculation of average annual value (or adjusted bases).(ii) Measuring period. (B) Election to use alternative measuring period.(iii) Adjusted basis election.(iv) Time and manner of elections and revocations.(B) Revocations and subsequent elections.(v) Method of measuring assets. (A) Publicly traded foreign corporations.(B) Non-publicly traded controlled foreign corporation.(2) Controlled foreign corporation determination.(C) Other foreign corporations. (2) Lower-tier subsidiaries. (i) Lower-tier subsidiaries that are publicly traded foreign corporations.(ii) Lower-tier subsidiaries that are non-publicly traded controlled foreign corporations.(iii) Other lower-tier subsidiaries.(3) Dual-character assets.(ii) Special rule when only part of an asset produces income.(iii) Special rule for stock that previously produced income that was excluded from passive income under section 1297(b)(2)(C).(4) Passive treatment of stock and partnership interests.(f) Definitions. (7) Publicly traded foreign corporation.(9) Tested foreign corporation.(g) Applicability date.(2) Paragraph (d)(1)(v)(B)(2) of this section.§ 1.1297-2 Special rules regarding look-through subsidiaries and look-through partnerships. (b) General rules. (1) Tested foreign corporation's ownership of a corporation.(2) Tested foreign corporation's proportionate share of the assets and income of a look-through subsidiary.(i) Proportionate share of subsidiary assets.(ii) Proportionate share of subsidiary income.(iii) Coordination of section 1297(c) with section 1298(b)(7).(3) Tested foreign corporation's proportionate share of the assets and income of a look-through partnership. (i) Proportionate share of partnership assets.(ii) Proportionate share of partnership income.(c) Elimination of certain intercompany assets and income.(1) General rule for asset test.(2) General rule for income test. (4) Examples. (v) Example 5. (B) Results. (3) Treatment of intangible and rental property.(d) Related person determination for purposes of section 1297(b)(2)(C).(e) Treatment of activities of certain look-through subsidiaries and look-through partnerships for purposes of certain exceptions.(3) Examples. (i) Example 1. (B) Results. (1) Qualified affiliates.(f) Gain on disposition of a look-through subsidiary or look-through partnership. (2) Amount of gain taken into account from disposition of look-through subsidiary.(3) Characterization of residual gain as passive income.(4) Gain taken into account from disposition of 25%-owned partnerships and look-through partnerships.(i) Section 954(c)(4) partnerships.(ii) Look-through partnerships.(g) Definitions. (1) Direct LTS obligation.(2) Indirect LTS obligation.(3) Look-through subsidiary.(4) Look-through partnership. (ii) Active partner test. (A) Partnership interest under asset test.(B) Partnership income under income test.(iv) Examples. (A) Example 1. (2) Results. (i) Active partner test with respect to partnership interest.(ii) Active partner test with respect to partnership income.(iii) Qualification of look-through partnership.(B) Example 2. (2) Results. (i) Active partner test with respect to partnership interest.(ii) Active partner test with respect to partnership income.(iii) Failure to qualify as look-through partnership.(10) Qualified affiliate.(13) Unremitted earnings.§ 1.1297-3 Deemed sale or deemed dividend election by a U.S. person that is a shareholder of a section 1297(e) PFIC. (b) Application of deemed sale election rules.(1) Eligibility to make the deemed sale election.(2) Effect of the deemed sale election.(3) Time for making the deemed sale election.(4) Manner of making the deemed sale election.(5) Adjustments to basis.(6) Treatment of holding period.(c) Application of deemed dividend election rules.(1) Eligibility to make the deemed dividend election.(2) Effect of the deemed dividend election.(3) Post-1986 earnings and profits defined.(4) Time for making the deemed dividend election.(5) Manner of making the deemed dividend election.(6) Adjustments to basis.(7) Treatment of holding period.(8) Coordination with section 959(e).(d) CFC qualification date.(e) Late purging elections requiring special consent. (2) Prejudice to the interests of the U.S. government.(3) Procedural requirements.(4) Time and manner of making late election.(5) Multiple late elections.(f) Effective/applicability date.§ 1.1297-4 Qualifying insurance corporation.(b) Qualifying insurance corporation.(d) Election to apply the alternative facts and circumstances test.(2) Predominantly engaged in an insurance business.(ii) Facts and circumstances.(iii) Examples of facts indicating a foreign corporation is not predominantly engaged in an insurance business.(3) Runoff-related circumstances.(4) Rating-related circumstances.(5) Election.(ii) Information provided by foreign corporation.(iii) Time and manner for making the election.(iv) Deemed election for small shareholders in publicly traded companies. (B) Publicly traded stock.(e) Rules limiting the amount of applicable insurance liabilities.(2) General limitation on applicable insurance liabilities.(f) Definitions. (1) Applicable financial statement. (iii) Regulatory annual statement.(2) Applicable insurance liabilities. (ii) Amounts not specified in paragraph (f)(2)(i) of this section.(3) Applicable insurance regulatory body.(4) Applicable reporting period.(5) Financial guaranty insurance company.(6) Financial statements.(7) Generally accepted accounting principles or GAAP.(9) International financial reporting standards or IFRS.(10) Mortgage insurance company.§ 1.1297-6 Exception from the definition of passive income for active insurance income. (b) Exclusion from passive income of active insurance income.(c) Exclusion of assets for purposes of the passive asset test under section 1297(a)(2).(d) Treatment of income and assets of certain look-through subsidiaries and look through partnerships for purposes of the section 1297(b)(2)(B) exception. (3) Examples. (i) Example 1: QIC holds all the stock of an investment subsidiary.(ii) Example 2: QIC holds all the stock of an operating subsidiary.(e) Qualifying domestic insurance corporation.T.D. 9360, 72 FR 54821 , Sept. 27, 2007, as amended by T.D. 9936, 86 FR 4556 , Jan. 15, 2021; T.D. 9936, 86 FR 13648 , Mar. 10, 2021 T.D. 9360, 72 FR 54821 , 9/27/2007, as amended by T.D. 9936, 86 FR 4556 , 1/15/2021; T.D. 9936, 86 FR 13648 , 3/10/2021