Mark-to-Market (MtM) election under §1296
A PFIC election available only for publicly-traded PFICs — taxes annual fair-value change as ordinary income.
Also called MTM, §1296 election, mark to market.
Under IRC §1296 you recognise the year-end fair-market-value change of the PFIC as ordinary income (gain) or ordinary loss (limited to prior MtM inclusions). Loss in excess of prior inclusions is suspended. MtM is available only for marketable PFICs (publicly traded on a qualifying exchange). The basis adjusts up or down by the recognised amount each year. Unlike QEF, no AIS from the fund is required.
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