On Jan. 24, 2022, the Internal Revenue Service issued proposed regulations that impact certain elections available to U.S. taxpayers with respect to their indirect interests in passive foreign investment companies (PFICs). Pursuant to the proposed regs, to the extent an interest in a PFIC is owned by a domestic partnership, the U.S. partners will be considered the shareholders of the PFIC rather than the domestic partnership. Thus, any qualified electing fund (QEF) or mark to market (MTM) elections with respect to the PFIC will be made at the U.S. partner level. This is a departure from the existing rules, which treat the domestic partnership as the U.S. shareholder for purposes of making such PFIC elections. The proposed regs similarly apply to U.S. shareholders of S corporations (S corps) that own an interest in a PFIC.