Election to Extend Time for Payment of Tax on Undistributed Earnings

§ 1294. Election to extend time for payment of tax on undistributed earnings(a) Extension allowed by election(1) In generalAt 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 951The 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 any amount is includible in the gross income of the taxpayer under section 951 with respect to such fund for such taxable year. (b) DefinitionsFor purposes of this section—(1) Undistributed PFIC earnings tax liabilityThe 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 earningsThe 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 generalIf 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 ruleFor purposes of subparagraph (A), a distribution shall be treated as made from the most recently accumulated earnings and profits. (2) Transfers, etc.If—(A) stock in a passive foreign investment company is transferred during the taxable year, or (B) a passive foreign investment company ceases to be a qualified electing fund,