Amend the Internal Revenue Code of 1986 to provide special rules for purposes of determining if financial guaranty insurance companies are qualifying insurance corporations under the passive foreign investment company rules.

This bill changes how the tax rules treat financial guaranty insurance companies, especially those that insure bonds. It lets these companies count “unearned premium reserves” as insurance liabilities if they meet specific tests. For example, they must use certain accounting rules, and show either a 15-to-1 financial guaranty exposure or a 9-to-1 state or local bond exposure, within limits set by a national insurance guideline. This helps them be treated as qualifying insurance companies under passive foreign investment company rules, rather than as passive investment firms .

The bill also adds reporting duties. Americans who own shares in certain foreign, privately held companies and claim those companies are not passive foreign investment companies must report information the Treasury asks for. It clarifies how certain financial statement items must be reported to count under these rules. Most changes start for tax years beginning after December 31, 2024, and related reports filed after that date. It also provides a “grace period” lookback rule for certain financial guaranty insurers so past years don’t automatically hurt investors’ tax treatment going forward .

• Who is affected: financial guaranty insurance companies; U.S. investors in certain foreign, non-public companies tied to these rules
• What changes: special tests let these insurers count unearned premium reserves; added investor reporting; clearer rules for what must appear on financial statements; a grace period rule for past years
• When: generally for tax years starting after December 31, 2024; reporting after that date; grace period covers years starting after 2017 and before 2025 for certain companies