26 U.S.C. § 1294 — Election to extend time for payment of tax on undistributed earnings

(a) Extension by election. (1) General rule. A taxpayer may elect to extend the payment deadline for an undistributed PFIC earnings tax liability for a taxable year, to the extent and within the limits of this section. (2) No election where section 951 amounts are included. The taxpayer may not elect for liability attributable to a qualified electing fund if an amount for that fund is includible in gross income under section 951 for the year. (b) Definitions. (1) “Undistributed PFIC earnings tax liability” is the excess of (A) the chapter's tax for the year over (B) the tax that would apply without including under section 1293 the qualified electing fund's undistributed earnings. (2) “Undistributed earnings” are the excess, if any, of (A) the amount included under section 1293(a) for the year over (B) the amount excluded under section 1293(c) for the year. (c) Ending the extension. (1) Distributions. (A) If a distribution is excluded for the year because of section 1293(c), the extension for liability attributable to the related earnings ends on the normal filing deadline for that year's return, without extensions. (B) The distribution is treated as coming first from the most recently accumulated earnings and profits. (2) Transfers and similar events. If PFIC stock is transferred during the year, or the PFIC stops being a qualified electing fund, every extension for undistributed PFIC earnings tax liability attributable to that stock—or, if the PFIC ceases to be a qualified electing fund, attributable to any stock in that company—that had not already ended ends on the normal filing deadline for the taxable year in which the transfer or cessation occurs. Regulations may provide an exception for a nonrecognition transfer and let the transferee succeed to the transferor's treatment. (3) Jeopardy. If the Secretary believes collection is in danger, the Secretary must immediately end the extension for that amount and make notice and demand for payment. (d) Election. The election must be made by the legal filing deadline, including extensions, for the taxable-year return. (e) Bond. Section 6165 applies as though the Secretary were extending the time to pay the tax. (f) Loans to shareholder. For this section and section 1293, a direct or indirect loan by a qualified electing fund to its shareholder is treated as a distribution to that shareholder. (g) Cross-reference. Section 6601 provides for interest during the extension period.