US Shareholders in Realm Energy

IMPORTANT TAX NOTICE TO U.S. SHAREHOLDERS

This information is provided for shareholders who are U.S. taxpayers. It may not be relevant for other persons.

ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY ANY PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.

Realm believes that it was a PFIC during one or more prior tax years, and based on current business plans and financial projections, Realm believes it may be a PFIC during its current tax year. PFIC classification is factual in nature and generally cannot be determined until the close of the tax year in question. Additionally, the analysis depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations. Consequently, there can be no assurances regarding the PFIC status of Realm during the current tax year or any prior tax year. Certain subsidiaries and other entities in which a PFIC has a direct or indirect interest could also be PFICs with respect to a U.S. person owning an interest in the first-mentioned PFIC.

PFIC Annual Information Statements are being provided for the 2009 and 2010 tax years pursuant to the requirements of Treasury Regulation Section 1.1295-1(g) to enable you, should you so choose based on the advice of your tax advisor in light of your personal tax circumstances, to elect to treat Realm as a QEF.
A U.S. shareholder who makes a QEF election with respect to a Realm entity is required to annually include in his or her income his or her pro rata share of the ordinary earnings and net capital gains of that Realm entity, whether or not that Realm entity distributes any amounts to its shareholders.

If you do not timely elect to treat a Realm entity as a QEF, then if the entity is a PFIC for any year during your holding period, adverse tax consequences could result to you. For example, if you were considered to receive a distribution that is considered to be an "excess distribution" under the PFIC rules or if you were considered to sell your Realm stock at a gain, you could be required to allocate the distribution or gain, as the case may be, ratably over the time period during which you held your stock while Realm was a PFIC, and pay U.S. taxes at the highest rate plus an interest charge to reflect the deemed deferral value.
The QEF election is generally made on Form 8621 ("Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund") on or before the due date, including extensions, for the income tax return with respect to the tax year to which the election relates.

THE U.S. TAX RULES REGARDING PFICS ARE VERY COMPLEX AND INVESTORS ARE STRONGLY URGED TO CONSULT THEIR OWN TAX ADVISOR REGARDING THE U.S. TAX CONSEQUENCES OF THE PFIC RULES

PFIC 2011 Annual StatementPFIC 2010 Annual StatementPFIC 2009 Annual Statement


 

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