IMPORTANT TAX NOTICE
Special U.S. Federal Income Tax Election is Available Regarding Your Investment in
Titan Uranium Inc.
Shareholders who are U.S. taxpayers should be aware that Titan Uranium Inc ("Titan") believes that it may have been a passive foreign investment company (“PFIC”) in its fiscal year ended August 31, 2007. Based on current business plans and financial projections, Titan expects to be a passive foreign investment company ("PFIC") for its current fiscal year ending August 31, 2008. Titan also expects that it may also be a PFIC in subsequent years.
The attached PFIC Annual Information Statement is being provided to U.S. shareholders pursuant to Treasury Regulations Section 1.1295-1(g)(1). This PFIC Annual Information Statement contains necessary information to enable a U.S. shareholder, should such a decision be made by that U.S. shareholder, to elect to treat Titan as a qualified electing fund ("QEF"). A QEF election is made by each U.S. shareholder and it is the responsibility of such a shareholder to make this election based on the merits of their particular fact pattern. A U.S. shareholder does not have to make this election for shares held in his or her retirement account.
A U.S. shareholder who makes a QEF election 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 Titan, whether or not Titan distributes any amounts to its shareholders.
Titan did not have ordinary earnings or net capital gains for its taxable year ended August 31, 2007 for these purposes. Based on current business plans and financial projections, Titan believes that it will not have ordinary earnings or net capital gains in any future years in which it may be a PFIC.
If a U.S. shareholder does not elect to treat Titan as a QEF, and if Titan is regarded as a PFIC for any year during that shareholder’s holding period, a U.S. shareholder would be subject to the PFIC rules. This may result in potentially adverse tax consequences to that U.S. shareholder. However, the particular fact pattern for each U.S. shareholder must be considered.
For example, if a U.S. shareholder were to receive an "excess distribution" as determined under these PFIC provisions, or if a U.S. shareholder were to sell Titan stock in the future at a gain, that U.S. shareholder may be required to allocate such distribution or gain, as the case may be, ratably over the time period during which the stock was held while Titan was a PFIC. This may result in an individual U.S. shareholder paying U.S. income tax at the highest personal income rate (rather than, if otherwise applicable, the long-term capital gain rate) on ordinary income in effect for each year to which the gain is allocated plus interest on the tax.
The QEF election is made by completing and attaching Form 8621 to a U.S. federal income tax return filed by the due date of the return, as extended.
We strongly urge each U.S. shareholders to consult their own tax advisor for advice concerning the application of the U.S. federal income tax rules governing PFICs and whether it is advisable for each U.S. shareholder to make a QEF election or other election under the PFIC rules.
Form 8621 and instructions for Form 8621 can be found on the Internet at
Form 8621 – http://www.irs.gov/pub/irs-pdf/i8621.pdf.
Instructions for Form 8621 – http://www.irs.gov/pub/irs-pdf/f8621.pdf.
PFIC Annual Information Statement
(1) This Information Statement applies to the taxable year of Titan Uranium Inc. (the "Company") ending on August 31, 2007.
(2) Each shareholder of the Company has the following pro-rata per share of the ordinary earnings and net capital gain of the Company for the taxable year of the Company specified in paragraph (1):
Ordinary Earnings: $0.00
Net Capital Gain: $0.00
(3) The amount of cash and fair market value of other property distributed or deemed distributed by the Company to each shareholder of the Company during the taxable year specified in paragraph (1) is as follows:
Cash: $0.00
Fair Market Value of Property: $0.00
(4) The Company will permit its shareholders to inspect and copy the Company's permanent books of account, records, and such other documents as may be maintained by the Company that are necessary to establish that PFIC ordinary earnings and net capital gain, as provided in section 1293(e) of the Internal Revenue Code, are computed in accordance with U.S. income tax principles.
It is the intention of Titan to provide this information to its shareholders
Signed by:
"John Povhe"
John Povhe, CA
Chief Financial Officer and Corporate Secretary |
