rp-26-10.pdf

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26 CFR 601.201: Rulings and determination letters
(Also: Part 1, §§ 1295; 1.1295-3)

Rev. Proc. 2026-10

SECTION 1. PURPOSE
.01 In General.
.02 References. As the context requires, references to Rev. Proc. 2026-1
include successor revenue procedures.
SECTION 2. BACKGROUND
.01 QEF Elections.
Generally, a foreign corporation is a PFIC under section 1297 for a taxable year if
the foreign corporation satisfies either the income or asset test of section 1297(a) for
that year. A foreign corporation is a PFIC under the income test if 75 percent or more of
its gross income for its taxable year is passive income. Alternatively, under the asset
test, a foreign corporation is a PFIC if 50 percent or more of its assets, measured by
average annual value or adjusted bases (as determined pursuant to Treas. Reg. §
1.1297-1(d)), during its taxable year are assets that produce, or are held for the

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production of, passive income.
Pursuant to section 1291, certain distributions by a PFIC and gains recognized
on dispositions of its stock included in the income of the PFIC shareholder generally are
subject to ordinary income treatment and an interest charge (excess distribution rules).
A PFIC shareholder may avoid the excess distribution rules by making a timely election
under section 1295 to treat a PFIC as a QEF (a QEF election), in which case the PFIC
shareholder will take into account annually its pro rata share of the ordinary earnings
and net capital gain of the PFIC under section 1293.
Under section 1295(a), a PFIC will be treated as a QEF with respect to a PFIC
shareholder if the shareholder makes a QEF election and the PFIC complies with the
requirements prescribed by the Secretary for purposes of (i) determining the ordinary
earnings and net capital gain of the PFIC and (ii) otherwise carrying out the purpose of
the PFIC provisions. Section 1295(b)(1) provides that a PFIC shareholder may make a
QEF election with respect to a PFIC for any taxable year of the PFIC shareholder.
Once made, the election will apply to that year and to all subsequent years of the PFIC
shareholder unless revoked with the consent of the Secretary. Section 1295(b)(2)
prescribes the time for making the election. In general, for the QEF election to be
applicable to a taxable year, the PFIC shareholder must make the election by the due
date, as extended under section 6081, for the PFIC shareholder’s return for that taxable
year (election due date).
If a PFIC shareholder makes a QEF election that is effective the first taxable year
in which the PFIC shareholder held stock in that PFIC, the PFIC shareholder is not

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subject to the excess distribution rules with respect to the PFIC (such QEF, a pedigreed
QEF). Further, a pedigreed QEF with respect to a PFIC shareholder will not be treated
as a QEF for any taxable year in which the foreign corporation is not a PFIC under
section 1297(a), and the PFIC shareholder is not required to take into account under
section 1293 its pro rata share of the foreign corporation’s ordinary earnings and net
capital gain for such year or to satisfy the section 1295 annual reporting requirements
for such year. However, if a PFIC shareholder makes a QEF election for any year after
the first taxable year in which the foreign corporation was a PFIC with respect to the
shareholder, then that stock continues to be treated as PFIC stock under section
1298(b)(1) (often referred to as the “once a PFIC, always a PFIC” rule), and the PFIC
shareholder continues to be subject to the excess distribution rules in addition to the
QEF rules after the PFIC shareholder makes the QEF election (such QEF, an
unpedigreed QEF). Under Treas. Reg. §§ 1.1291-9 and 1.1291-10, a PFIC shareholder
may purge the PFIC taint in this circumstance and make the PFIC a pedigreed QEF
with respect to the PFIC shareholder by electing to recognize gain on a deemed sale of
its PFIC stock or, in the case of a PFIC that is also a controlled foreign corporation (as
defined in section 957(a)), electing to recognize a deemed dividend from the PFIC,
while simultaneously making a QEF election.
Under Treas. Reg. § 1.1295-1(f)(1), a PFIC shareholder makes a QEF election
by: (i) properly completing a Form 8621, Information Return by a Shareholder of a
Passive Foreign Investment Company or Qualified Electing Fund; (ii) attaching Form
8621 to its Federal income tax return filed by the election due date for the PFIC

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shareholder’s election year; and (iii) receiving, and reflecting in Form 8621, the
information provided in the PFIC Annual Information Statement described in Treas.
Reg. § 1.1295-1(g)(1), the Annual Intermediary Statement described in Treas. Reg.
§ 1.1295-1(g)(3), or the applicable combined statement described in Treas. Reg.
§ 1.1295-1(g)(4) (a Combined Statement) for the taxable year of the PFIC ending with
or within the taxable year for which Form 8621 is being filed. Further, if the PFIC
Annual Information Statement contains a statement that the foreign corporation has
permitted the PFIC shareholder to examine the books of account, records, and other
documents of the foreign corporation for the PFIC shareholder to calculate the amounts
of the PFIC’s ordinary earnings and net capital gain according to Federal income tax
accounting principles and to calculate the PFIC shareholder’s pro rata shares of those
amounts (as described in Treas. Reg. § 1.1295-1(g)(1)(ii)(C)), the PFIC shareholder
must attach a statement to Form 8621 that indicates that the PFIC shareholder, not the
PFIC, calculated the PFIC’s ordinary earnings and net capital gain.
.02 Retroactive QEF Elections.
Section 1295(b)(2) provides that, to the extent permitted under regulations, a
PFIC shareholder may make a QEF election for a taxable year after the election due
date (retroactive QEF election) if the PFIC shareholder fails to make a timely election
because the PFIC shareholder reasonably believed that the foreign corporation was not
a PFIC. Thus, if eligible, a PFIC shareholder may make a QEF election retroactive to
the first taxable year in which that PFIC shareholder held stock of that PFIC and, as a
result, the PFIC would be a pedigreed QEF with respect to the PFIC shareholder.

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Treas. Reg. § 1.1295-3 provides two sets of rules for making a retroactive QEF
election, which are the exclusive rules under which a PFIC shareholder may make a
retroactive QEF election. Relief for failure to make a timely QEF election is therefore
not available under any other provision of law, including under Treas. Reg.
§§ 301.9100-1 through -3.
Under the first set of rules, as provided under Treas. Reg. § 1.1295-3(b)
(protective regime), to make a retroactive QEF election, a PFIC shareholder must have:
(i) reasonably believed, as of the election due date, that the foreign corporation was not
a PFIC for its taxable year that ended during the retroactive election year
; (ii) filed a
protective statement applicable to the retroactive election year with respect to the
foreign corporation as described in Treas. Reg. § 1.1295-3(b)(2); and (iii) complied with
the other terms and conditions of the protective statement. Treas. Reg. § 1.1295-3(e)
provides special rules for certain minority PFIC shareholders to meet the reasonable
belief requirement under Treas. Reg. § 1.1295-3(b)(1).
Under the second set of rules, as provided under Treas. Reg. § 1.1295-3(f), a
PFIC shareholder that has not satisfied the requirements of the protective regime under
Treas. Reg. § 1.1295-3(b) or (e) may request consent of the Commissioner to make a
retroactive QEF election. Under Treas. Reg. § 1.1295-3(f)(1), the Commissioner will
grant relief only if (i) the PFIC shareholder reasonably relied on a qualified tax
professional, (ii) granting consent will not prejudice the interests of the United States
government (see section 4.02(3) of this revenue procedure), (iii) the PFIC shareholder
requests consent before the IRS raises upon audit the PFIC status of the corporation for

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any taxable year of the PFIC shareholder, and (iv) the PFIC shareholder satisfies
certain procedural requirements for obtaining relief.
Treas. Reg. § 1.1295-3(f)(2) sets forth rules for determining whether a PFIC
shareholder reasonably relied on a qualified tax professional, including that a PFIC
shareholder is deemed to have reasonably relied on a qualified tax professional only if
the PFIC shareholder reasonably relied on a qualified tax professional (including a tax
professional employee of the PFIC shareholder) who failed to identify the foreign
corporation as a PFIC or failed to advise the PFIC shareholder of the consequences of
making, or failing to make, a QEF election. See section 4.02(2)(e) of this revenue
procedure for more detail regarding the statement of facts that a PFIC shareholder must
provide in connection with these rules.
.03 Requesting IRS Consent to Make a Retroactive QEF Election.
Treas. Reg. § 1.1295-3(f)(4) provides that a PFIC shareholder requests consent
to make a retroactive QEF election by filing a ruling request with the Office of Associate
Chief Counsel (International) (retroactive QEF election ruling request). The retroactive
QEF election ruling request must satisfy the general requirements, including payment of
the user fee, for ruling requests filed with Associate offices as set forth in Rev. Proc.
2026-1.
The retroactive QEF election ruling request must include certain affidavits.
Under Treas. Reg. § 1.1295-3(f)(4)(ii), the ruling request must include a detailed
affidavit from the PFIC shareholder, or a person authorized to sign a Federal income tax
return on behalf of the PFIC shareholder, describing the events that led to the failure to

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make a QEF election by the election due date, and the discovery of that failure. The
PFIC shareholder’s affidavit must describe the engagement and responsibilities of the
qualified tax professional as well as the extent to which the PFIC shareholder relied on
the tax professional. The PFIC shareholder, or the individual signing for an entity, must
sign the affidavit under penalties of perjury. An individual that signs for an entity must
have personal knowledge of the facts and circumstances at issue.
The retroactive QEF election ruling request must also include detailed affidavits
from individuals having knowledge or information about the events that led to the failure
to make a QEF election by the election due date and to the discovery of that failure.
See Treas. Reg. § 1.1295-3(f)(4)(iii). These individuals must include the qualified tax
professional upon whose advice the PFIC shareholder relied, as well as any individual
(including an employee of the PFIC shareholder) who made a substantial contribution to
the return’s preparation, and any accountant or attorney, knowledgeable in tax matters,
who advised the PFIC shareholder regarding its ownership of the stock of the foreign
corporation. Each affidavit must describe the individual’s engagement and
responsibilities as well as the advice concerning the tax treatment of the foreign
corporation that the individual provided to the PFIC shareholder. Each affidavit also
must include the individual’s name, address, and taxpayer identification number, and
must be signed by the individual under penalties of perjury.
The PFIC shareholder must provide any additional information requested by the
Commissioner in connection with the retroactive QEF election ruling request. See
Treas. Reg. § 1.1295-3(f)(4)(iv). The PFIC shareholder is also required to notify the

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branch of the Office of Associate Chief Counsel (International) handling the request if,
while the request is pending, the IRS begins an examination of the PFIC shareholder’s
return for the retroactive election year or any subsequent taxable year during which the
PFIC shareholder holds stock of the foreign corporation. See Treas. Reg. § 1.1295-
3(f)(4)(v).
SECTION 3. INFORMAL PRE-FILING CONSULTATIONS WITH THE OFFICE OF
ASSOCIATE CHIEF COUNSEL (INTERNATIONAL)
In the interest of making the retroactive QEF election ruling request process
more effective and efficient, the Office of Associate Chief Counsel (International) invites
PFIC shareholders and their representatives to contact the Office of Associate Chief
Counsel (International) for an informal consultation in connection with determining
whether to file a request. The consultation may include procedural or substantive
issues. Statements or representations made by the Office of Associate Chief Counsel
(International) in an informal consultation are not binding on the IRS. The requirements
set forth in section 10 of Rev. Proc. 2026-1 with respect to conferences and pre-
submission conferences do not apply to informal consultations under section 3 of this
revenue procedure. Inquiries and informal consultation requests may be sent to
CC.INTL.RetroQEF.PLR@irscounsel.treas.gov or made to the Office of Associate
Chief Counsel (International) by phone at (202) 317-6934 (not a toll-free call).
Conferences and pre-submission conferences described in section 10 of Rev.
Proc. 2026-1 remain available to PFIC shareholders.

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SECTION 4. PROCEDURES FOR FILING RETROACTIVE QEF ELECTION RULING
REQUESTS
.01 General. This section sets forth certain procedures, rules, and guidelines
relevant to filing a request for consent to make a retroactive QEF election. A checklist
summarizing the requirements is provided in the Appendix.
.02 Procedures.
(1) User fees.
(a) General rules. All retroactive QEF election ruling requests must be
accompanied by the appropriate user fee as determined from the fee schedule provided
in Appendix A to Rev. Proc. 2026-1. See section 15.02 of Rev. Proc. 2026-1. If a
request is not matched with full payment, the IRS will exercise discretion in deciding
whether to immediately return the request. See section 15.09 of Rev. Proc. 2026-1.
In general, the user fee amount provided in paragraph (A)(3)(c)(ii) of Appendix A
to Rev. Proc. 2026-1 (“[a]ll other letter ruling requests” not otherwise identified in
paragraph (A)(3) of Appendix A) applies to a retroactive QEF election ruling request.
See section 4.02(1)(b) of this revenue procedure for the availability of reduced user fees
in certain cases. The user fee amount provided in paragraph (A)(3)(c)(i) of Appendix A
to Rev. Proc. 2026-1 (user fee for ruling requests for relief under Treas. Reg.
§ 301.9100-3 or section 1362(b)(5)) does not apply to a retroactive QEF election ruling
request.
A separate user fee is required for each PFIC for which a PFIC shareholder is
seeking consent to make a retroactive QEF election. See Treas. Reg. § 1.1295-3(f)(4).

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For example, if a PFIC shareholder requests letter rulings for consent to make
retroactive QEF elections with respect to three PFICs in a single submission, such
submission must be accompanied by payment of three separate user fees as provided
in Appendix A to Rev. Proc. 2026-1. As described in section 4.02(1)(b) of this revenue
procedure, reduced user fees may be available to PFIC shareholders in some cases,
and a PFIC shareholder may generally pay the lowest user fee available to such PFIC
shareholder as provided in Appendix A to Rev. Proc. 2026-1.
(b) Reduced user fees.
(i) Substantially identical letter ruling requests.
A PFIC shareholder requesting multiple retroactive QEF election rulings may
qualify for reduced user fees as provided in paragraph (A)(5)(a) of Appendix A to Rev.
Proc. 2026-1 if the requests are for substantially identical rulings. Cf. section 15.07 of
Rev. Proc. 2026-1. To qualify for this reduced user fee, all information and underlying
documents must be substantially identical and all letter ruling requests must be
submitted at the same time in a single submission. In addition, the submission must
state that the letter ruling requests, all information, and underlying documents are
substantially identical, and must specifically identify the extent to which the letter ruling
requests, information, and underlying documents are not identical. The IRS will
generally treat additional retroactive QEF election ruling requests in a single submission
regarding multiple PFICs as substantially identical rulings if the facts and circumstances
that led to the failure to make the elections and the discovery of such failure are
substantially similar, even though the stock of each PFIC may have been acquired by

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the PFIC shareholder in different years and the calculations of the PFIC shareholder’s
potential QEF inclusion amounts under section 1293(a) for each PFIC may be different.
For this purpose, the IRS generally will treat the fact that a tax advisor
contemporaneously discovered the PFIC status of multiple foreign corporations owned
by a PFIC shareholder as evidencing that the failures to make QEF elections and the
discovery of such failures are based on substantially similar facts and circumstances.
Example. At different times, a taxpayer purchased stock in three foreign
corporations that are PFICs (FC1, FC2, and FC3) and relied on a tax
advisor who failed to identify the foreign corporations as PFICs. After the
PFIC shareholder hired a new tax advisor, the new tax advisor discovered
contemporaneously that each of FC1, FC2, and FC3 qualify as PFICs.
Because the new tax advisor discovered that all three foreign corporations
are PFICs contemporaneously, if (1) the PFIC shareholder otherwise
meets the requirements to submit retroactive QEF election ruling requests
and (2) the PFIC shareholder makes a single, simultaneous submission
with respect to all three PFICs, then the PFIC shareholder must pay the
full user fee for the first ruling with respect to FC1 (to treat FC1 as a QEF)
as provided in paragraph (A)(3)(ii) of Appendix A to Rev. Proc. 2026-1
(assuming paragraph (A)(4)(a) and (b) of Appendix A to Rev. Proc. 2026-1
do not apply; see section 4.02(1)(b)(ii) of this revenue procedure) and is
eligible to pay the reduced user fees for substantially identical rulings with
respect to each of FC2 and FC3.

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(ii) Reduced user fees based on gross income. Reduced user fees
may apply if a PFIC shareholder’s “gross income” (as determined under paragraphs
(B)(2), (3), (4), and (5) of Appendix A to Rev. Proc. 2026-1) as reported on the PFIC
shareholder’s last Federal income tax return (as amended) filed for a full (12-month)
taxable year ending before the date the request is filed is less than certain amounts.
Two different reduced user fee amounts are available depending on the PFIC
shareholder’s gross income. See paragraph (A)(4)(a) and (b) of Appendix A to Rev.
Proc. 2026-1. PFIC shareholders seeking a reduced user fee based on their gross
income must attach a certification as provided in paragraph (B)(1) of Appendix A to Rev.
Proc. 2026-1.
(iii) Lowest available user fee. A PFIC shareholder may generally
pay the lowest user fee available to the PFIC shareholder as provided in Appendix A to
Rev. Proc. 2026-1.
Example. On June 30, 2026, a PFIC shareholder requests letter rulings
for consent to make retroactive QEF elections with respect to four PFICs
in a single, simultaneous submission. The PFIC shareholder is eligible to
pay reduced user fees either for substantially identical letter rulings as
provided in paragraph (A)(5)(a) of Appendix A to Rev. Proc. 2026-1 with
respect to three PFICs or based on the PFIC shareholder’s gross income
as provided in paragraph (A)(4)(a) of Appendix A to Rev. Proc. 2026-1
with respect to all four PFICs. On June 30, 2026, the PFIC shareholder’s
total user fee amount for substantially identical letter ruling requests would

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be $16,560 (the reduced user fee of $3,450 based on gross income with
respect to the first PFIC and the substantially identical letter ruling request
user fee of $4,370 with respect to the remaining three PFICs). On June
30, 2026, the PFIC shareholder’s total user fee amount for four separate
ruling requests based on the PFIC shareholder’s gross income would be
$13,800 (the reduced user fee of $3,450 based on gross income with
respect to all four PFICs). The PFIC shareholder can choose to treat the
four ruling requests as separate, not substantially identical, and pay
$13,800, the lowest user fee amount available to such PFIC shareholder.
Nonetheless, only one submission that recites all the relevant facts and
representations with respect to all four PFICs is necessary. See Appendix
A to Rev. Proc. 2026-1.
(c) User fee rate codes.
Separate user fee rate codes for retroactive QEF election ruling requests are
available when PFIC shareholders are submitting the user fee payments through
www.pay.gov. PFIC shareholders may select from the following user fee rate codes for
their retroactive QEF election ruling requests.
User fee rate code Description
PLRRRQ
The full user fee for a retroactive QEF election ruling
PLRRRQR
The reduced user fee based on gross income as provided in
paragraph (A)(4)(a) of Appendix A to Rev. Proc. 2026-1
PLRRRQR1M
The reduced user fee based on gross income as provided in
paragraph (A)(4)(b) of Appendix A to Rev. Proc. 2026-1
PLRRRQM
The reduced user fee for a substantially identical ruling as
provided in paragraph (A)(5)(a) of Appendix A to Rev. Proc. 2026-1

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A retroactive QEF election ruling request must include a statement indicating the
relevant user fee rate codes on the first page of the submission. If the submission is
accompanied by reduced user fees as provided in paragraph (A)(4)(a) or (b), or (5)(a) of
Appendix A to Rev. Proc. 2026-1, the statement or certification must explain why the
submission qualifies for the reduced user fees.
(2) Items to include with retroactive QEF election ruling submission. With
respect to each PFIC in a retroactive QEF election ruling submission, a PFIC
shareholder must include the following documents and information:
(a) a statement listing the dates on which the PFIC shareholder acquired each
interest in the foreign corporation, the PFIC shareholder’s ownership
percentage of the foreign corporation immediately after acquiring each
interest, and the first taxable year of the foreign corporation ending with or
within a taxable year of the PFIC shareholder for which the retroactive QEF
election is requested to be in effect;
(b) PFIC Annual Information Statements (or Intermediary Statements or
Combined Statements, as applicable) for each taxable year of the PFIC
ending with or within a taxable year of the PFIC shareholder for which the
retroactive QEF election is requested to be in effect, if available;
(c) a detailed affidavit from the PFIC shareholder, or a person authorized to sign
a Federal income tax return on behalf of the PFIC shareholder, meeting the
requirements of Treas. Reg. § 1.1295-3(f)(4)(ii);
(d) detailed affidavits from other persons prescribed by and meeting the

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requirements of Treas. Reg. § 1.1295-3(f)(4)(iii), including the qualified tax
professional upon whose advice the PFIC shareholder relied, as well as any
individual (including an employee of the PFIC shareholder) who made a
substantial contribution to the return’s preparation, and any accountant or
attorney, knowledgeable in tax matters, who advised the PFIC shareholder
with regard to their ownership of the stock of the foreign corporation. The IRS
may in its discretion deem the requirement to obtain such an affidavit satisfied
in certain situations in which the PFIC shareholder has exhausted all
reasonable means to obtain such affidavit and the affidavit is unavailable,
such as a PFIC shareholder that is unable to obtain an affidavit from a
qualified tax professional upon whose advice the PFIC shareholder relied
because the qualified tax professional is deceased and their records are
unavailable. A PFIC shareholder that is unable to obtain such an affidavit is
strongly encouraged to seek informal consultation with the Office of Associate
Chief Counsel (International) before filing the ruling request as described in
section 3 of this revenue procedure.
(e) a statement of facts (including any supporting documentation) demonstrating
that in preparing their income tax return for the taxable year with respect to
which the PFIC shareholder is requesting consent to make a retroactive QEF
election—
(i) the PFIC shareholder reasonably relied on a qualified tax professional
(including a tax professional employed by the PFIC shareholder) and—

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1. the tax professional failed to identify the foreign corporation as a
PFIC or failed to advise the PFIC shareholder of the
consequences of making, or failing to make, the QEF election;
and
2. the PFIC shareholder did not know and did not have reason to
know that the qualified tax professional was not competent to
render tax advice with respect to the ownership of shares of a
foreign corporation or did not have access to all relevant facts
and circumstances;
(ii) the PFIC shareholder did not ignore the advice of a qualified tax
professional that the foreign corporation was a PFIC and of the
availability of the QEF election and related tax consequences; and
(iii) the PFIC shareholder otherwise did not know or have reason to know
that the foreign corporation was a PFIC and of the availability of a QEF
election; and
(f) a representation that, as of the time of the filing of the retroactive QEF
election ruling request, a representative of the IRS has not raised on audit the
PFIC status of the foreign corporation for any taxable year of the PFIC
shareholder.
(3) Post-submission process and prejudice determination. Upon receipt of a
PFIC shareholder’s retroactive QEF election ruling submission with the correct user fee
(see section 4.02(1) of this revenue procedure), the IRS will conduct a technical review

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to determine whether such PFIC shareholder satisfies the requirements of Treas. Reg.
§ 1.1295-3(f). An important determination in this review is whether granting consent
would prejudice the interests of the United States government under Treas. Reg.
§ 1.1295-3(f)(3).
Except as otherwise provided in Treas. Reg. § 1.1295-3(f)(3)(ii) (entry into a
closing agreement to eliminate prejudice), consent for a retroactive QEF election will not
be granted if it would prejudice the interests of the United States government. Under
Treas. Reg. § 1.1295-3(f)(3)(i), the interests of the United States government are
prejudiced if granting relief would result in the PFIC shareholder having a lower tax
liability, taking into account applicable interest charges, in the aggregate for all years
affected by the retroactive QEF election (other than by a de minimis amount) than the
PFIC shareholder would have had if the PFIC shareholder had made a QEF election by
the election due date. The time value of money is taken into account for purposes of
this computation.
In determining whether a retroactive QEF election will prejudice the interests of
the United States government, the IRS will generally rely on the PFIC Annual
Information Statements (or Intermediary Statements or Combined Statements, as
applicable) for each taxable year of the PFIC ending with or within a taxable year of the
PFIC shareholder for which the retroactive QEF election is requested to be in effect that
are provided by the PFIC shareholder with the submission. If PFIC Annual Information
Statements (or Intermediary Statements or Combined Statements, as applicable) are
not available or do not provide sufficient information for one or more taxable years of the

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PFIC ending with or within a taxable year of the PFIC shareholder for which the
retroactive QEF election is requested to be in effect, the PFIC shareholder must provide
other information (including any supporting documentation) sufficient to demonstrate
that granting relief would not prejudice the interests of the United States government.
In all cases, regardless of whether PFIC Annual Information Statements (or
Intermediary Statements or Combined Statements, as applicable) are available, the
prejudice determination requires PFIC shareholders to provide information sufficient for
the IRS to: (1) review the accuracy of the PFIC shareholder’s proposed QEF inclusion
calculation under section 1293(a) for all years that would be covered by the election;
and (2) accurately compute the PFIC shareholder’s tax liability for such years if a QEF
election had been timely made. In order to complete its determination, the IRS
generally will issue one or more prejudice determination information requests to the
PFIC shareholder setting forth information to be provided by the PFIC shareholder to
the IRS.
(4) Prejudice determination information requests. Section 4.02(5) of this
revenue procedure provides a sample information list containing items that the IRS will
typically request to establish that a retroactive QEF election would not prejudice the
interests of the United States government under Treas. Reg. § 1.1295-3(f)(3).
Information requests may also include any other information the IRS requests pursuant
to Treas. Reg. § 1.1295-3(f)(4)(iv).
PFIC shareholders should provide this information only upon IRS request and do
not need to include such information with the submission of a retroactive QEF election

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ruling request because the information requested by the IRS may vary depending on
the facts and circumstances of the ruling request. All information provided pursuant to
such an IRS request must comply with the requirements of section 8.05 of Rev. Proc.
2026-1, including the requirement to submit such information within 21 days from the
date of the request unless an extension of time is granted. Accordingly, the IRS
strongly encourages PFIC shareholders to review the items in the sample information
list prior to submitting a retroactive QEF election ruling request and be prepared to
respond to similar requests.
(5) Sample information list. Information that the IRS typically requests for
each PFIC for which a retroactive QEF election ruling request is made to establish
whether granting consent would prejudice the interests of the United States government
includes the items listed in paragraphs (a) through (e) of this section 4.02(5).
Responses should generally be accompanied by supporting documentation
demonstrating that the information provided is true, correct, and complete in all
respects, which documentation may include audited financial statements of the PFIC for
each taxable year of the PFIC ending with or within a taxable year of the PFIC
shareholder for which the retroactive QEF election is requested to be in effect.
(a) Ownership and PFIC status. For each taxable year of the foreign
corporation ending with or within a taxable year of the PFIC shareholder
for which the retroactive QEF election is requested to be in effect,
confirmation (including supporting computations) whether the foreign
corporation qualified or did not qualify as a PFIC under section 1297(a).

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(b) Computations in absence of PFIC Annual Information Statement (or
Intermediary Statement or Combined Statement, as applicable). For
each taxable year of the PFIC ending with or within a taxable year of the
PFIC shareholder for which the retroactive QEF election is requested to
be in effect and for which a PFIC Annual Information Statement (or
Intermediary Statement or Combined Statement, as applicable) either is
not available or does not provide sufficient information to calculate the
PFIC shareholder’s pro rata share of the PFIC’s ordinary earnings and
net capital gain:
(i) Earnings and profits computations of the PFIC as described in
section 1293(e)(3) that include any amounts that, when distributed,
can be excluded from the PFIC shareholder’s gross income under
section 1293(c). If these amounts have not been calculated by the
PFIC, the IRS may in its discretion permit reliance on a PFIC
shareholder’s computations of these amounts based on the PFIC’s
audited financial statements. An example of the general process to
compute earnings and profits of a foreign corporation using audited
financial statements is the current year earnings and profits
calculation for foreign corporations on Schedule H of Form 5471.
(ii) Net capital gain computations of the PFIC.
(c) Distributions from the PFIC. For each taxable year of the PFIC
shareholder for which the retroactive QEF election is requested to be in

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effect, the amount of cash and the fair market value of any property
distributed or deemed distributed by the foreign corporation to the
shareholder.
(d) Income inclusions.
(i) A detailed description of any income with respect to the PFIC
previously reported on the PFIC shareholder’s tax returns, whether
recognized under section 1291 or otherwise. The description
should include details such as: the taxable year of the income
inclusion, the amount of the income inclusion, the character of the
income inclusion, a general accounting description of the type of
income, and confirmation whether such income was recognized
under section 1291(a).
(ii) A detailed description of any income with respect to the PFIC
that was not previously reported on the PFIC shareholder’s tax
returns. The description should include details such as: the taxable
year in which the income was realized, the amount of the income,
character of the income, a general accounting description of the
type of income, and an explanation of why the income was not
reported.
(e) Computations of the PFIC shareholder’s potential QEF income
inclusions under section 1293(a) or draft amended tax returns reflecting
the potential QEF income inclusions and associated tax liability with

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respect to the PFIC for each taxable year of the PFIC shareholder for
which the retroactive QEF election is requested to be in effect in which
the PFIC shareholder would have QEF inclusions under section 1293(a)
if the request were granted.
Examples.
Example 1. Sufficient financial statement data. A PFIC and a PFIC shareholder
both have calendar taxable years. The PFIC shareholder acquired stock of the PFIC in
tax year 1 and did not make a timely QEF election with respect to the PFIC. In tax year
4, after the PFIC shareholder has already filed their return for tax year 3, the PFIC
shareholder submits a ruling request to make a retroactive QEF election pursuant to
Treas. Reg. § 1.1295-3(f), effective in tax year 1. The PFIC shareholder includes a
PFIC Annual Information Statement from the PFIC for tax year 3 with its submission and
the PFIC Annual Information Statement provides sufficient information to calculate the
PFIC shareholder’s pro rata share of the PFIC’s ordinary earnings and net capital gain
for tax year 3. However, PFIC Annual Information Statements are not available for each
of tax years 1 and 2. In response to a subsequent IRS prejudice determination
information request, the PFIC shareholder provides the PFIC’s audited financial
statements for each of tax years 1 and 2 that are sufficient to calculate the PFIC
shareholder’s pro rata share of the PFIC’s ordinary earnings and net capital gain. The
unavailability of PFIC Annual Information Statements for each of tax years 1 and 2 will
not cause the PFIC shareholder to be ineligible to make a retroactive QEF election
effective in tax year 1.

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Example 2. Insufficient financial statement data. The facts are the same as
example 1, except that the PFIC’s audited financial statements for each of tax years 1
and 2 are not sufficient to calculate the PFIC shareholder’s pro rata share of the PFIC’s
ordinary earnings and net capital gain for each of tax years 1 and 2. Therefore, the
PFIC shareholder is not eligible to make a retroactive QEF election effective in tax year
1 or tax year 2. The PFIC shareholder may be eligible to make a retroactive QEF
election effective in tax year 3, though such an election would result in an unpedigreed
QEF unless accompanied by a deemed sale or deemed dividend election pursuant to
Treas. Reg. §§ 1.1291-9 or 1.1291-10.
SECTION 5. EFFECTIVE DATE
This revenue procedure is effective for all ruling requests received on or after
January 20, 2026.
SECTION 6. PAPERWORK REDUCTION ACT
The Paperwork Reduction Act of 1995 (44 U.S.C. §§ 3501-3520) generally
requires that a Federal agency obtain the approval of the Office of Management and
Budget (OMB) before collecting information from the public, whether such collection of
information is mandatory, voluntary, or required to obtain or retain a benefit. An agency
may not conduct or sponsor, and a person is not required to respond to, a collection of
information unless it displays a valid control number assigned by the OMB.
This revenue procedure mentions the collections of information in Treas. Reg.
§ 1.1295-3 and Rev. Proc. 2026-1. The collections of information in Treas. Reg.
§ 1.1295-3 and Rev. Proc. 2026-1 have been reviewed and approved by the OMB

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under control numbers 1545-1555 and 1545-1522, respectively. This revenue
procedure does not change or create new collection requirements not already approved
by the OMB.
Books or records relating to a collection of information must be retained as long
as their contents may become material in the administration of any internal revenue tax
law. Generally, tax returns and tax return information are confidential, as required by
section 6103.
SECTION 7. DRAFTING INFORMATION
The principal authors of this revenue procedure are Alfred H. Bae and Jee Hyun
Park of the Office of Associate Chief Counsel (International). For further information
regarding this revenue procedure contact Mr. Bae or Ms. Park at (202) 317-6934 (not a
toll-free call).

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APPENDIX
CHECKLIST FOR RETROACTIVE QEF RULING REQUESTS

User Fees
A separate user fee for each PFIC for which the PFIC shareholder seeks consent
to file a retroactive QEF election.
(a) General User Fee (Section 4.02(1)(a) of this revenue procedure, see
also paragraph (A)(3)(c)(ii) of Appendix A to Rev. Proc. 2026-1)
(b) Reduced User Fees (Section 4.02(1)(b) of this revenue procedure)
(i) Substantially identical letter ruling requests (see also paragraph
(A)(5)(a) of Appendix A to Rev. Proc. 2026-1)
(ii) Reduced user fees based on gross income (see also paragraph
(A)(4)(a) and (b) of Appendix A to Rev. Proc. 2026-1)
(iii) Lowest available user fee (see also Appendix A to Rev. Proc.
2026-1)
A ruling request must include a statement indicating the relevant user fees with
respect to each PFIC on the first page of the submission, including, as
applicable, a description of why the submission qualifies for reduced user fees.
Items to include with retroactive QEF election ruling submission
A statement listing the dates on which the PFIC shareholder acquired each
interest in the PFIC and the PFIC shareholder’s ownership percentage of the
PFIC after acquiring each interest (Section 4.02(2)(a) of this revenue procedure)
PFIC Annual Information Statements (or Intermediary Statements or Combined

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Statements) (Section 4.02(2)(b) of this revenue procedure)
A detailed affidavit from the PFIC shareholder, or a person authorized to sign a
Federal income tax return on behalf of the PFIC shareholder, meeting the
requirements of Treas. Reg. § 1.1295-3(f)(4)(ii)
Detailed affidavits from other persons (as described in Section 4.02(2)(d) of this
revenue procedure)
A statement of facts and supporting documentation (as described in Section
4.02(2)(e) of this revenue procedure)
A representation that the PFIC status of the corporation has not been raised on
audit (Section 4.02(2)(f) of this revenue procedure)