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Special adverse rules that impact certain estate planning goals could apply to our common shares if we are a PFIC.
Special rules apply with respect to the calculation of the amount of the foreign tax credit with respect to excess
distributions by a PFIC.
Each U.S. Holder that has a direct or indirect interest in our common shares generally must file IRS Form 8621
reporting distributions received and gain realized with respect to our common shares. In addition, subject to certain
rules intended to avoid duplicative filings, U.S. Holders generally must file an annual information return on IRS
Form 8621 with respect to our common shares in which the U.S. Holder holds a direct or indirect interest. Each
U.S. Holder should consult its tax advisor regarding these and any other applicable information or other reporting
requirements.
If we are a PFIC in the taxable year in which we pay a dividend or the immediately preceding taxable year,
dividends on our common shares will not be “qualified dividend income” and such dividends received by individual
U.S. Holders generally will be subject to U.S. federal income tax at ordinary income tax rates.
Sale or Other Disposition of Our Common Shares
The tax treatment of a sale or other disposition of our common shares by a U.S. Holder will differ based upon
whether or not the PFIC rules apply and whether or not the U.S. Holder has made any of the elections described
above.
If the excess distribution regime discussed above applies to the sale or disposition of our common shares, the rules
regarding the taxation of excess distributions will generally apply upon a sale or other disposition of the common
shares.
If the excess distribution regime discussed above does not apply to the sale or disposition of our common shares, the
difference between the amount received and the adjusted tax basis of the common shares will be gain or loss. If, as
usually is the case, the common shares are a capital asset in the hands of the U.S. Holder, such gain or loss will be
capital gain. If the U.S. Holder has made a QEF election with respect to the shares, the adjusted basis will be
increased by the U.S. Holder’s proportionate share of income and capital gains taken into account each year as a
result of the QEF election. If the U.S. Holder has made a mark-to-market election with respect to the shares, the
adjusted basis will be increased by the net income recognized on the common shares as a result of the mark-to-
market election. Capital gain or loss with respect to common shares generally will be long-term capital gain or loss
if the holding period for the shares giving rise to such gain or loss exceeds one year. Under current law, long-term
capital gains realized by individual U.S. Holders are taxed at reduced rates. Short-term capital gains are taxed at
ordinary income rates. The deductibility of capital losses is subject to significant limitations.
Distributions
We do not expect to pay dividends in the foreseeable future. However, subject to the passive foreign investment
company rules discussed below, a U.S. Holder must include in gross income as dividend income the gross amount of
any distribution (including the amount of any Canadian withholding tax thereon) paid by the Company out of its
current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) with respect to our
common shares. A distribution on our common shares in excess of current or accumulated earnings and profits will
be treated as a tax-free return of capital to the extent of the U.S. Holder's adjusted basis in such common shares (thus
reducing, but not below zero, the adjusted tax basis of such common shares), and thereafter as gain from the sale or
exchange of common shares. See
“Sale or Other Disposition of Our Common Shares
” above.
If we are a PFIC in the taxable year in which we pay a dividend or the immediately preceding taxable year,
dividends received by individual U.S. Holders generally will be subject to U.S. federal income tax at ordinary
income tax rates.
