# Prop. Treas. Reg. § 1.954-2: Foreign personal holding company income.

Proposed regulation, not in force. REG-111629-23, 89 FR 67336, published 2024-08-20 <https://www.federalregister.gov/documents/2024/08/20/2024-18281/guidance-regarding-elections-relating-to-foreign-currency-gains-and-losses>. Interprets 26 U.S.C. § 954.

Par. 2. Section 1.954-2 is amended by: 1. Revising the first sentence of paragraph (g)(3)(ii) introductory text; 2. Revising paragraphs (g)(3)(iii) and (g)(4)(iii); and 3. Adding two sentences to the end of paragraph (i)(3). The revisions and additions read as follows:

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(g) * * *

(3) * * *

(ii) * * * The controlling United States shareholders, as defined in § 1.964-1(c)(5)(i), make the election on behalf of the controlled foreign corporation by filing a statement with their timely-filed, original Federal income tax returns for the taxable year of the United States shareholders in which or with which the taxable year of the controlled foreign corporation for which the election is made ends, clearly indicating that the election has been made. * * *

(iii) Revocation of election. An election under this paragraph (g)(3) is effective for the taxable year of the controlled foreign corporation for which it is made and all subsequent taxable years of such corporation unless revoked by the Commissioner or as provided in this paragraph (g)(3)(iii) by the controlling United States shareholders (as defined in § 1.964-1(c)(5)(i)) of the controlled foreign corporation. Once made, an election under this paragraph (g)(3) cannot be revoked by the controlled foreign corporation's controlling United States shareholders (as defined in § 1.964-1(c)(5)(i)) until the sixth taxable year following the year in which the previous election was made. Further, if an election has been revoked under this paragraph (g)(3)(iii), a new election may not be made until the sixth taxable year following the year in which the previous election was revoked. The controlling United States shareholders revoke an election on behalf of a controlled foreign corporation by filing a statement that clearly indicates such election has been revoked with their original or amended income tax returns for the taxable year of such United States shareholders in which or with which the taxable year of the controlled foreign corporation for which the election is revoked ends.

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(4) * * *

(iii) Revocation of election. An election under this paragraph (g)(4) is effective for the taxable year of the controlled foreign corporation for which it is made and all subsequent taxable years of such corporation unless revoked by the Commissioner or as provided in this paragraph (g)(4)(iii) by the controlling United States shareholders (as defined in § 1.964-1(c)(5)(i)) of the controlled foreign corporation. Once made, an election under this paragraph (g)(4) cannot be revoked by the controlled foreign corporation's controlling United States shareholders (as defined in § 1.964-1(c)(5)(i)) until the sixth taxable year following the year in which the previous election was made. Further, if an election has been revoked under this paragraph (g)(4)(iii), a new election may not be made until the sixth taxable year following the year in which the previous election was revoked. The controlling United States shareholders revoke an election on behalf of a controlled foreign corporation by filing a statement that clearly indicates such election has been revoked with their original or amended income tax returns for the taxable year of such United States shareholders in which or with which the taxable year of the controlled foreign corporation for which the election is revoked ends.

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(i) * * *

(3) * * * Paragraphs (g)(3)(ii) and (iii) and (g)(4)(iii) of this section apply to taxable years of controlled foreign corporations ending on or after [DATE OF PUBLICATION OF FINAL RULE]. For taxable years of controlled foreign corporations ending before [DATE OF PUBLICATION OF FINAL RULE], see § 1.954-2(g)(3)(ii) and (iii) and (g)(4)(iii) as in effect and contained in 26 CFR part 1, as revised April 1, 2024.