§ 1295. Qualified electing fund

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1986

   Tax Reform Act of 1986

   Pub. L. 99–514 title XII § 1235(a) · 100 Stat. 2085

   Enacted · 26 U.S.C. § 1295

   Added Pub. L. 99–514, title XII, § 1235(a), Oct. 22, 1986, 100 Stat. 2571

   Source evidence

   Code source credit
   Added Pub. L. 99–514, title XII, § 1235(a), Oct. 22, 1986, 100 Stat. 2571

   Enacted provision · exact public law section
   (a) General Rule.— Subchapter P of chapter 1 is amended by adding at the end thereof the following new part: “PART VI— TREATMENT OF CERTAIN PASSIVE FOREIGN INVESTMENT COMPANIES “Subpart A. Interest on tax deferral. “Subpart B. Treatment of qualified electing funds. “Subpart C. General provisions. “Subpart A— Interest on Tax Deferral “1291. Interest on tax deferral. “SEC. 1291. INTEREST ON TAX DEFERRAL. “(a) Treatment of Distributions and Stock Dispositions.— “(1) Distributions.— If a United States person receives an excess distribution in respect of stock in a passive foreign investment company, then— “(A) the amount of the excess distribution shall be allocated ratably to each day in the taxpayer’s holding period for the stock, “(B) with respect to such excess distribution, the taxpayer’s gross income for the current year shall include (as ordinary income) only the amounts allocated under subparagraph (A) to— “(i) the current year, or “(ii) any period in the taxpayer’s holding period before the 1st day of the 1st taxable year of the com-pany for which it was a passive foreign investment company (or, if later, January 1, 1987), and “(C) the tax imposed by this chapter for the current year shall be increased by the deferred tax amount (determined under subsection (c)). “(2) Dispositions.— If the taxpayer disposes of stock in a passive foreign investment company, then the rules of paragraph (1) shall apply to any gain recognized on such disposition in the same manner as if such gain were an excess distribution. “(3) Definitions.— For purposes of this section— “(A) Holding period.— The taxpayer’s holding period shall be determined under section 1223; except that, in the case of an excess distribution, such holding period shall be treated as ending on the date of such distribution. “(B) Current year.— The term ‘current year’ means the taxable year in which the excess distribution or disposition occurs. “(4) Coordination with section 904.— Subparagraph (B) of paragraph (1) shall not apply for purposes of section 904. “(5) Section 902 not to apply.— Section 902 shall not apply to any dividend paid by a passive foreign investment company unless such company is a qualified electing fund. “(b) Excess Distribution.— “(1) In general.— For purposes of this section, the term ‘excess distribution’ means any distribution in respect of stock received during any taxable year to the extent such distribution does not exceed its ratable portion of the total excess distribution (if any) for such taxable year. “(2) Total excess distribution.— For purposes of this subsection— “(A) In general.— The term ‘total excess distribution’ means the excess (if any) of— “(i) the amount of the distributions in respect of the stock received by the taxpayer during the taxable year, over “(ii) 125 percent of the average amount received in respect of such stock by the taxpayer during the 3 preceding taxable years (or, if shorter, the portion of the taxpayer’s holding period before the taxable year). “(B) No excess for 1st year.— The total excess distributions with respect to any stock shall be zero for the taxable year in which the taxpayer’s holding period in such stock begins. “(3) Adjustments.— Under regulations prescribed by the Secretary— “(A) determinations under this subsection shall be made on a share-by-share basis, except that shares with the same holding period may be aggregated, “(B) proper adjustments shall be made for stock splits and stock dividends, “(C) if the taxpayer does not hold the stock during the entire taxable year, distributions received during such year shall be annualized, “(D) if the taxpayer’s holding period includes periods during which the stock was held by another person, distributions received by such other person shall be taken into account as if received by the taxpayer, and “(E) if the distributions are received in a foreign currency, determinations under this subsection shall be made in such currency and the amount of any excess distribution determined in such currency shall be translated into dollars. “(c) Deferred Tax Amount.— For purposes of this section— “(2) In general.— The term ‘deferred tax amount’ means, with respect to any distribution or disposition to which subsection (a) applies, an amount equal to the sum of— “(A) the aggregate increases in taxes described in paragraph (2), plus “(B) the aggregate amount of interest (determined in the manner provided under paragraph (3)) on such increases in tax. “(2) Aggregate increases in taxes.— For purposes of paragraph (1)(A), the aggregate increases in taxes shall be determined by multiplying each amount allocated under subsection (a)(1)(A) to any taxable year (other than any taxable year referred to in subsection (a)(1)(B)) by the highest rate of tax in effect for such taxable year under section 1 or 11, whichever applies. “(3) Computation of interest.— “(A) In general.— The amount of interest referred to in paragraph (1)(B) on any increase determined under paragraph (2) for any taxable year shall be determined for the period— “(i) beginning on the due date for such taxable year, and “(ii) ending on the due date for the taxable year with or within which the distribution or disposition occurs, by using the rates and method applicable under section 6621 for underpayments of tax for such period. “(B) Due date.— For purposes of this subsection, the term ‘due date’ means the date prescribed by law (determined without regard to extensions) for filing the return of the tax imposed by this chapter for the taxable year. “(d) Coordination With Subpart B.— “(1) In general.— This section shall not apply with respect “(A) any distribution paid by a passive foreign investment company during a taxable year for which such company is a qualified electing fund, and “(B) any disposition of stock in a passive foreign investment company if such company is a qualified electing fund for each of its taxable years— “(i) which begins after December 31, 1986, and for which such company is a passive foreign investment company, and “(ii) which includes any portion of the taxpayer’s holding period. “(2) Election to recognize gain where company becomes qualified electing fund.— “(A) In general.— If— “(i) a passive foreign investment company becomes a qualified electing fund for a taxable year which begins after December 31, 1986, “(ii) the taxpayer holds stock in such company on the first day of such taxable year, and “(iii) the taxpayer establishes to the satisfaction of the Secretary the fair market value of such stock on such first day, the taxpayer may elect to recognize gain as if he sold such stock on such first day for such fair market value. “(B) Adjustments.— In the case of any stock to which subparagraph (A) applies— “(i) the adjusted basis of such stock shall be increased by the gain recognized under subparagraph (A), and “(ii) the taxpayer’s holding period in such stock shall be treated as beginning on the first day referred to in subparagraph (A). “(e) Certain Basis, Etc., Rules Made Applicable.— Rules similar to the rules of subsections (c), (d), (e), and (f) of section 1246 shall apply for purposes of this section; except that— “(1) the reduction under subsection (e) of such section shall be the excess of the basis determined under section 1014 over the adjusted basis of the stock immediately before the decedent’s death, and “(2) such a reduction shall not apply in the case of a decedent who was not a nonresident alien at all times during his holding period in the stock. “(f) Nonrecognition Provisions.— To the extent provided in regulations, gain shall be recognized on any disposition of stock in a passive foreign investment company. “Subpart B— Treatment of Qualified Electing Funds “Sec. 1293. Current taxation of income from qualified electing funds. “Sec. 1294. Election to extend time for payment of tax on undistributed earnings. “Sec. 1295. Qualified electing fund. “SEC. 1293. CURRENT TAXATION OF INCOME FROM QUALIFIED ELECTING FINDS. “(a) Inclusion.— “(1) In general.— Every United States person who owns (or is treated under section 1297(a) as owning) stock of a qualified electing fund at any time during the taxable year of such fund shall include in gross income— “(A) as ordinary income, such shareholder’s pro rata share of the ordinary earnings of such fund for such year, and “(B) as long-term capital gain, such shareholder’s pro rata share of the net capital gain of such fund for such year. “(2) Year of inclusion.— The inclusion under paragraph (1) shall be for the taxable year of the shareholder in which or with which the taxable year of the fund ends. “(b) Pro Rata Share.— The pro rata share referred to in subsection (a) in the case of any shareholder is the amount which would have been distributed with respect to the shareholder’s stock if, on each day during the taxable year of the fund, the fund had distributed to each shareholder a pro rata share of that day’s ratable share of the fund’s ordinary earnings and net capital gain for such year. “(c) Previously Taxed Amounts Distributed Tax Free.— If the taxpayer establishes to the satisfaction of the Secretary that any amount distributed by a passive foreign investment company is paid out of earnings and profits of the company which were included under subsection (a) in the income of any United States person, such amount shall be treated as a distribution which is not a dividend. “(d) Basis Adjustments.— The basis of the taxpayer’s stock in a passive foreign investment company shall be— “(1) increased by any amount which is included in the income of the taxpayer under subsection (a) with respect to such stock, and “(2) decreased by any amount distributed with respect to such stock which is not includible in the income of the taxpayer by reason of subsection (c). A similar rule shall apply also in the case of any property if by reason of holding such property the taxpayer is treated under section 1297(a) as owning stock in a qualified electing fund. “(e) Ordinary Earnings.— For purposes of this section— “(1) Ordinary earnings.— The term ‘ordinary earnings’ means the excess of the earnings and profits of the qualified electing fund for the taxable year over its net capital gain for such taxable year. “(2) Limitation on net capital gain.— A qualified electing fund’s net capital gain for any taxable year shall not exceed its earnings and profits for such taxable year. “(f) Foreign Tax Credit Allowed In the Case of 10-Percent Corporate Shareholder.— For purposes of section 960— “(1) any amount included in the gross income under subsection (a) shall be treated as if it were included under section 951(a), and “(2) any amount excluded from gross income under subsection (c) shall be treated in the same manner as amounts excluded from gross income under section 959. “SEC. 1294. ELECTION TO EXTEND TIME FOR PAYMENT OF TAX ON UNDISTRIBUTED EARNINGS. “(a) Extension Allowed by Election.— “(1) In general.— At the election of the taxpayer, the time for payment of any undistributed PFIC earnings tax liability of the taxpayer for the taxable year shall be extended to the extent and subject to the limitations provided in this section. “(2) Election not permitted where amounts otherwise includible under section 551 or 951.— The taxpayer may not make an election under paragraph (1) with respect to the undistributed PFIC earnings tax liability attributable to a qualified electing fund for the taxable year if— “(A) any amount is includible in the gross income of the taxpayer under section 551 with respect to such fund for such taxable year, or “(B) any amount is includible in the gross income of the taxpayer under section 951 with respect to such fund for such taxable year. “(b) Definitions.— For purposes of this section— “(1) Undistributed pfic earnings tax liability.— The term ‘undistributed PFIC earnings tax liability’ means, in the case of any taxpayer, the excess of— “(A) the tax imposed by this chapter for the taxable year, over “(B) the tax which would be imposed by this chapter for such year without regard to the inclusion in gross income under section 1293 of the undistributed earnings of a qualified electing fund. “(2) Undistributed earnings.— The term ‘undistributed earnings’ means, with respect to any qualified electing fund, the excess (if any) of— “(A) the amount includible in gross income by reason of section 1293(a) for the taxable year, over “(B) the amount not includible in gross income by reason of section 1293(c) for such taxable year. “(c) Termination of Extension.— “(1) Distributions.— “(A) In general.— If a distribution is not includible in gross income for the taxable year by reason of section 1293(c), then the extension under subsection (a) for payment of the undistributed PFIC earnings tax liability with respect to the earnings to which such distribution is attributable shall expire on the last date prescribed by law (determined without regard to extensions) for filing the return of tax for such taxable year. “(B) Ordering rule.— For purposes of subparagraph (A), a distribution shall be treated as made from the most recently accumulated earnings and profits. “(2) Dispositions, etc.— If— “(A) stock in a passive foreign investment company is disposed of during the taxable year, or “(B) a passive foreign investment company ceases to be a qualified electing fund, all extensions under subsection (a) for payment of undistributed PFIC earnings tax liability attributable to such stock (or, in the case of such a cessation, attributable to any stock in such company) which had not expired before the date of such disposition or cessation shall expire on the last date prescribed by law (determined without regard to extensions) for filing the return of tax for the taxable year in which such disposition or cessation occurs. “(3) Jeopardy.— If the Secretary believes that collection of an amount to which an extension under this section relates is in jeopardy, the Secretary shall immediately terminate such extension with respect to such amount, and notice and demand shall be made by him for payment of such amount. “(d) Election.— The election under subsection (a) shall be made not later than the time prescribed by law (including extensions) for filing the return of tax imposed by this chapter for the taxable year. “(e) Authority To Require Bond.— Section 6165 shall apply to any extension under this section as though the Secretary were extending the time for payment of the tax. “SEC. 1295. QUALIFIED ELECTING FUND. “(a) General Rule.— For purposes of this part, the term ‘qualified electing fund’ means any passive foreign investment company if— “(1) an election under subsection (b) applies to such company for the taxable year, and “(2) such company complies for such taxable year with such requirements as the Secretary may prescribe for purposes of— “(A) determining the ordinary earnings and net capital gain of such company for the taxable year, “(B) ascertaining the ownership of its outstanding stock, and “(C) otherwise carrying out the purposes of this subpart. “(b) Election.— “(1) In General.— A passive foreign investment company may make an election under this subsection for any taxable year. Such an election, once made, shall apply to all subsequent taxable years of such company for which such company is a passive foreign investment company unless revoked with the consent of the Secretary. “(2) When made.— An election under this subsection may be made for any taxable year at any time before the 15th day of the 3rd month of the following taxable year. Subpart C— General Provisions “Sec. 1296. Passive foreign investment company. “Sec. 1297. Special rules. “SEC. 1296. PASSIVE FOREIGN INVESTMENT COMPANY. “(a) In General.— For purposes of this part, except as otherwise provided in this subpart the term ‘passive foreign investment company’ means any foreign corporation if— “(1) 75 percent or more of the gross income of such corporation for the taxable year is passive income, or “(2) the average percentage of assets (by value) held by such corporation during the taxable year which produce passive income or which are held for the production of passive income is at least 50 percent. “(b) Passive Income.— For purposes of this section— “(1) In general.— Except as provided in paragraph (2), the term ‘passive income’ has the meaning given such term by section 904(d)(2)(A) without regard to the exceptions contained in clause (iii) thereof. “(2) Exception for certain banks and insurance companies.— Except as provided in regulations, the term ‘passive income’ does not include any income— “(A) derived in the active conduct of a banking business by an institution licensed to do business as a bank in the United States (or, to the extent provided in regulations, by any other corporation), or “(B) derived in the active conduct of an insurance business by a corporation which would be subject to tax under subchapter L if it were a domestic corporation. “(c) Look-Thru in the Case of 25-Percent Owned Corporations.— If a foreign corporation owns at least 25 percent (by value) of the stock of another corporation, for purposes of determining whether such foreign corporation is a passive foreign investment company, such foreign corporation shall be treated as if it— “(1) held its proportionate share of the assets of such other corporation, and “(2) received directly its proportionate share of the income of such other corporation. “(d) Section 1247 Corporations.— For purposes of this part, the term ‘passive foreign investment company’ does not include any foreign investment company to which section 1247 applies. “SEC. 1297. SPECIAL RULES. “(a) Attribution of Ownership.— For purposes of this part— “(1) Attribution to united states persons.— This subsection— “(A) shall apply to the extent that the effect is to treat stock of a passive foreign investment company as owned by a United States person, and “(B) except to the extent provided in regulations, shall not apply to treat stock owned (or treated as owned under this subsection) by a United States person as owned by any other person. “(2) Corporations.— “(A) In general.— If 50 percent or more in value of the stock of a corporation is owned, directly or indirectly, by or for any person, such person shall be considered as owning the stock owned directly or indirectly by or for such corporation in that proportion which the value of the stock which such person so owns bears to the value of all stock in the corporation. “(B) 50-percent limitation not to apply to pfic.— For purposes of determining whether a shareholder of a passive foreign investment company is treated as owning stock owned directly or indirectly by or for such company, subparagraph (A) shall be applied without regard to the 50-percent limitation contained therein. “(3) Partnerships, etc.— Stock owned, directly or indirectly, by or for a partnership, estate, or trust shall be considered as being owned proportionately by its partners or beneficiaries. “(4) Successive application.— Stock considered to be owned by a person by reason of the application of paragraph (2) or (3) shall, for purposes of applying such paragraphs, be considered as actually owned by such person. “(b) Other Special Rules.— For purposes of this part— “(1) Time for determination.— Stock held by a taxpayer shall be treated as stock in a passive foreign investment company if, at any time during the holding period of the taxpayer with respect to such stock, such corporation (or any predecessor) was a passive foreign investment corporation which was not a qualified electing fund. The preceding sentence shall not apply if the taxpayer elects to recognize gain (as of the last day of the last taxable year for which the company was a passive foreign investment company) under rules similar to the rules of section 1291(d)(2). “(2) Certain corporations not treated as pfic’s during start-up year.— A corporation shall not be treated as a passive foreign investment company for the first taxable year such corporation has gross income (hereinafter in this paragraph referred to as the ‘start-up year’) if— “(A) no predecessor of such corporation was a passive foreign investment company, “(B) it is established to the satisfaction of the Secretary that such corporation will not be a passive foreign invest-ment company for either of the 1st 2 taxable years following the start-up year, and “(C) such corporation is not a passive foreign investment company for either of the 1st 2 taxable years following the start-up year. “(3) Certain corporations changing businesses.— A corporation shall not be treated as a passive foreign investment company for any taxable year if— “(A) such corporation (and any predecessor) was not a passive foreign investment corporation for any prior taxable year, “(B) it is established to the satisfaction of the Secretary that— “(i) substantially all of the passive income of the corporation for the taxable year is attributable to proceeds from the disposition of 1 or more active trades or businesses, and “(ii) such corporation will not be a passive foreign investment company for either of the 1st 2 taxable years following such taxable year, and “(C) such corporation is not a passive foreign investment company for either of such 2 taxable years. “(4) Separate interests treated as separate corporations.— Under regulations prescribed by the Secretary, where necessary to carry out the purposes of this part, separate classes of stock (or other interests) in a corporation shall be treated as interests in separate corporations. “(5) Application of section where stock held by other entity.— Under regulations, in any case in which a United States person is treated as holding stock in a passive foreign investment company by reason of subsection (a), any disposition by the United States person or the person holding such stock which results in the United States person being treated as no longer holding such stock, shall be treated as a disposition by the United States person with respect to stock in the passive foreign investment company. “(6) Dispositions.— If a taxpayer uses any stock in a passive foreign investment company as security for a loan, the taxpayer shall be treated as having disposed of such stock. “(7) Coordination with section 1246.— Section 1246 shall not apply to earnings and profits of any company for any taxable year beginning after December 31, 1986, if such company is a passive foreign investment company for such taxable year, “(c) Regulations.— The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this part.”

   Effective date note
   Amendment by section 1012(p)(37)(A) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Pub. L. 100–647, title VI, § 6127(c), Nov. 10, 1988, 102 Stat. 3715, provided that:

2. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 § 6127(a) · 102 Stat. 3342

   Amended · 26 U.S.C. § 1295(a)

   Pub. L. 100–647, § 6127(a), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “For purposes of this part, the term ‘qualified electing fund’ means any passive foreign investment company if—

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 100–647, § 6127(a), amended subsec. (a) generally. Prior to amendment, subsec. (a) read as follows: “For purposes of this part, the term ‘qualified electing fund’ means any passive foreign investment company if—

   “(1) an election under subsection (b) applies to such company for the taxable year, and “(2) such company complies for such taxable year with such requirements as the Secretary may prescribe for purposes of— “(A) determining the ordinary earnings and net capital gain of such company for the taxable year, “(B) ascertaining the ownership of its outstanding stock, and “(C) otherwise carrying out the purposes of this subpart.”

   Enacted provision · exact public law section
   (a) General Rule.— Section 1295 of the 1986 Code (defining qualified electing fund) is amended to read as follows: “SEC. 1295. QUALIFIED ELECTING FUND. “(a) General Rule.— For purposes of this part, any passive foreign investment company shall be treated as a qualified electing fund with respect to the taxpayer if— “(1) an election by the taxpayer under subsection (b) applies to such company for the taxable year, and “(2) such company complies with such requirements as the Secretary may prescribe for purposes of— “(A) determining the ordinary earnings and net capital gain of such company, and “(B) otherwise carrying out the purposes of this subpart. “(b) Election.— “(1) In general.— A taxpayer may make an election under this subsection with respect to any passive foreign investment company for any taxable year of the taxpayer. Such an election, once made with respect to any company, shall apply to all subsequent taxable years of the taxpayer with respect to such company unless revoked by the taxpayer with the consent of the Secretary. “(2) When made.— An election under this subsection may be made for any taxable year at any time on or before the due date (determined with regard to extensions) for filing the return of the tax imposed by this chapter for such taxable year. To the extent provided in regulations, such an election may be made later than as required in the preceding sentence where the taxpayer fails to make a timely election because the taxpayer reasonably believed that the company was not a passive foreign investment company.”

   Effective date note
   Amendment by section 1012(p)(37)(A) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Pub. L. 100–647, title VI, § 6127(c), Nov. 10, 1988, 102 Stat. 3715, provided that:

3. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 § 6127(a) · 102 Stat. 3342

   Amended · 26 U.S.C. § 1295(b)

   Pub. L. 100–647, § 6127(a), amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows:

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 100–647, § 6127(a), amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows:

   “(1) In general.—A passive foreign investment company may make an election under this subsection for any taxable year. Such an election, once made, shall apply to all subsequent taxable years of such company for which such company is a passive foreign investment company unless revoked with the consent of the Secretary. “(2) When made.—An election under this subsection may be made for any taxable year at any time before the 15th day of the 3rd month of the following taxable year. To the extent provided in regulations, such an election may be made later than as required by the preceding sentence in cases where the company failed to make a timely election because it reasonably believed it was not a passive foreign investment company.”

   Enacted provision · exact public law section
   (a) General Rule.— Section 1295 of the 1986 Code (defining qualified electing fund) is amended to read as follows: “SEC. 1295. QUALIFIED ELECTING FUND. “(a) General Rule.— For purposes of this part, any passive foreign investment company shall be treated as a qualified electing fund with respect to the taxpayer if— “(1) an election by the taxpayer under subsection (b) applies to such company for the taxable year, and “(2) such company complies with such requirements as the Secretary may prescribe for purposes of— “(A) determining the ordinary earnings and net capital gain of such company, and “(B) otherwise carrying out the purposes of this subpart. “(b) Election.— “(1) In general.— A taxpayer may make an election under this subsection with respect to any passive foreign investment company for any taxable year of the taxpayer. Such an election, once made with respect to any company, shall apply to all subsequent taxable years of the taxpayer with respect to such company unless revoked by the taxpayer with the consent of the Secretary. “(2) When made.— An election under this subsection may be made for any taxable year at any time on or before the due date (determined with regard to extensions) for filing the return of the tax imposed by this chapter for such taxable year. To the extent provided in regulations, such an election may be made later than as required in the preceding sentence where the taxpayer fails to make a timely election because the taxpayer reasonably believed that the company was not a passive foreign investment company.”

   Effective date note
   Amendment by section 1012(p)(37)(A) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Pub. L. 100–647, title VI, § 6127(c), Nov. 10, 1988, 102 Stat. 3715, provided that:

4. 1988

   Technical and Miscellaneous Revenue Act of 1988

   Pub. L. 100–647 § 1012(p)(37)(A) · 102 Stat. 3342

   Inserted · 26 U.S.C. § 1295(b)

   Pub. L. 100–647, § 1012(p)(37)(A), inserted sentence at end of par. (2) permitting a later election when a company reasonably believed it was not a passive foreign investment company

   Target inherited from the preceding amendment note.

   Source evidence

   Code amendment note
   Pub. L. 100–647, § 1012(p)(37)(A), inserted sentence at end of par. (2) permitting a later election when a company reasonably believed it was not a passive foreign investment company.

   Enacted provision · exact public law section
   (A) Paragraph (2) of section 1295(b) of the 1986 Code is amended by adding at the end thereof the following new sentence: “To the extent provided in regulations, such an election may be made later than as required by the preceding sentence in cases where the company failed to make a timely election because it reasonably believed it was not a passive foreign investment company.”

   Effective date note
   Amendment by section 1012(p)(37)(A) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title. Pub. L. 100–647, title VI, § 6127(c), Nov. 10, 1988, 102 Stat. 3715, provided that:

4 of 4 references resolved to an enrolled provision