Guidance on Passive Foreign Investment Companies and the Treatment of Qualified Improvement Property Under the Alternative Depreciation System for Purposes of Sections 250(b) and 951A(d)

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This document contains proposed regulations regarding the determination of whether a foreign corporation is treated as a passive foreign investment company ("PFIC") for purposes of the Internal Revenue Code ("Code"). The proposed regulations also provide guidance regarding the treatment of income and assets of a qualifying insurance corporation ("QIC") that is engaged in the active conduct of an insurance business ("PFIC insurance exception"). This document also contains proposed regulations addressing the treatment of qualified improvement property ("QIP") under the alternative depreciation system ("ADS") for purposes of calculating qualified business asset investment ("QBAI") for purposes of the global intangible low-taxed income ("GILTI") and the foreign-derived intangible income ("FDII") provisions, which were added to the Code in the Tax Cuts and Jobs Act. The proposed regulations affect United States persons with direct or indirect ownership interests in certain foreign corporations, United States shareholders of controlled foreign corporations, and domestic corporations eligible for the deduction for FDII.