4. Arranging the sectional authority for § 1.1298-1 in numerical order and revising the authority; and
Par. 14. Section 1.1298-1 is amended by: 1. Revising paragraphs (b)(1), (b)(2) heading, (b)(2)(i) introductory text, and (b)(2)(ii); 2. Removing paragraph (c)(6); 3. Redesignating paragraphs (c)(7) through (9) as paragraphs (c)(6) through (8), respectively; 4. Removing the language “Except as provided in paragraph (h)(2) of this section” in paragraph (h)(1) and adding “Except as provided in paragraph (h)(2) or (3) of this section” in its place; 5. Removing the language “Paragraph (c)(9)” in paragraph (h)(2) and adding “Paragraph (c)(8)” in its place; and 6. Adding paragraph (h)(3). The revisions and addition read as follows:
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(b) * * * (1) General rule. Except as otherwise provided in this section, a United States person that is a shareholder of a PFIC (as defined in § 1.1291-1(b)(7)) must complete and file Form 8621, “Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund” (or successor form), under section 1298(f) and this section for the PFIC if, during the shareholder's taxable year, the shareholder—
(i) Directly owns stock of the PFIC; or
(ii) Is an indirect shareholder under § 1.1291-1(b)(8) that holds any interest in the PFIC through one or more entities, domestic or foreign, each of which is not a shareholder of such PFIC within the meaning of § 1.1291-1(b)(7).
(2) Additional requirement to file for certain beneficiaries of domestic estates and domestic nongrantor trusts —(i) General rule. Except as otherwise provided in this section, an indirect shareholder that owns an interest in a PFIC by reason of an interest in a domestic estate or domestic nongrantor trust (as described in § 1.1291- 1(b)(8)(iii)(C)) also must file Form 8621 (or successor form) with respect to the PFIC under section 1298(f) and this section if, during the indirect shareholder's taxable year, the indirect shareholder is—
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(ii) Exception to indirect shareholder reporting for certain QEF inclusions and MTM inclusions. The filing requirements under paragraph (b)(2)(i) of this section do not apply with respect to an interest in a PFIC owned by an indirect shareholder described in paragraph (b)(2)(i)(C) or (D) of this section if the domestic nongrantor trust or domestic estate through which the indirect shareholder owns such interest in the PFIC timely files Form 8621 (or successor form) with respect to the PFIC under paragraph (b)(1) of this section.
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(h) * * *
(3) Paragraphs (b)(1) and (b)(2)(i) and (ii) of this section apply to taxable years of shareholders beginning on or after [date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register ]. For taxable years of shareholders beginning before [date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register ], see § 1.1298-1(b)(1) and (b)(2)(i) and (ii) as in effect and contained in 26 CFR part 1, as revised April 1, 2021.