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  1. @J, That’s correct. You weren’t operating under the Section 1291 rules in previous years — you were not subject to PFIC taxation at all. So you don’t have to go through the exercise of the deemed sale under Section 1291 to flip over to MTM status.

  2. Regarding “Excess distribution rules apply in first year of the MTM election”, the example shown in Regs 1.1296-1 (d)(5)(ii) seems to be an exception: in that example, stockholder A has held PFIC stock since 1995 and (on becoming a US person) made a MTM election in 2005. But the MTM rule applies in that year (2005) according to the example. Is this because cases like this are effectively equal to making a MTM election in the first year of the holding period?

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