FAQs for Form 8832 and Foreign Eligible Entities

 

Q1. How should an entity classification election be reported on line 1 if the classification of the foreign eligible entity was not relevant (as defined in Regulations sections 301.7701-3(d)(1)) before the effective date of the election? (added February 11, 2022)

A1.  If the classification of a foreign eligible entity was not relevant (as defined in Regulations section 301.7701-3(d)(1)) before the effective date of an entity classification election, box 1a should be checked and the election should be reported as an "Initial classification by a newly-formed entity," notwithstanding that the effective date of the election is subsequent to the date that the entity was formed in the foreign jurisdiction.  Although the election will generally effect a change in classification (see AM 2021-002PDF), box 1b should not be checked.

Q2. How should a prior entity classification election be reported on line 2b if the classification of the foreign eligible entity was not relevant (as defined in Regulations sections 301.7701-3(d)(1)) before the effective date of that prior election? (added February 11, 2022)

A2.  If the classification of a foreign eligible entity was not relevant (as defined in Regulations sections 301.7701-3(d)(1)) before the effective date of a prior entity classification election, the entity may elect to change its classification within 60 months of such effective date regardless of whether that prior election effected a change in classification. See AM 2021-002PDF. In this case, the box for "Yes" in line 2b should be checked and the prior entity classification election should be treated as an initial classification election by a newly-formed entity for purposes of determining whether the entity is eligible to make the election.