The line 15f instruction means is that you cannot reduce or offset 1291 gains with 1291 losses, and that there is no mechanism in the PFIC regulations to deal with a loss on the sale of 1291 shares. Proposed Regulation 1.1291-3 states “Unless otherwise provided under another provision of the Code, a loss realized on a disposition of stock of a section 1291 fund is not recognized.” Foreign mutual fund shares meet the definition of a capital asset under IRC 1221, and therefore losses are allowed under those rules.