New IRS Form 965 Line-by-Line: Reporting Section 965 Transition Tax Inclusions, Deductions, and Deferrals

Tying Forms 965 and 965-A to Required Schedules and 2017 Transition Tax Statement

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, November 12, 2019

Recorded event now available

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Course Materials

This course will provide tax advisers with a practical guide to reporting the repatriation provisions of the transition tax on new Form 965. The webinar presumes the attendees already are versed in the provisions of Section 965 and will bypass the fundamentals of the statute to offer a line-by-line review of reporting transition tax amounts, E&P and basis adjustments, and foreign tax credit calculations.

PLEASE NOTE: This is an advanced-level webinar; it assumes the attendee is already well-versed in the initial transition tax rules.

Description

The "deemed repatriation" provisions of the 2018 tax reform requiring U.S. shareholders of "specified foreign corporations" to report and pay a one-time "transition tax" on previously untaxed foreign income continue to challenge taxpayers engaged in foreign activities. The provisions required taxpayers to calculate and report the tax on a "transition tax statement" included in their 2017 filings. The statute allowed taxpayers to elect under Section 965(h) to pay the transition tax interest-free over eight years, with estimated payments to begin in 2018.

Both the rules and the reporting requirements created significant confusion for tax advisers. For the 2018 and following tax years, the IRS released the new Form 965 Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System package, including accompanying schedules. Taxpayers who reported a deemed repatriation inclusion for either 2017 or 2018 are required to complete the form and schedules and attach them to their 2018 and subsequent income tax returns.

The form and the schedules roughly correspond to the terms of the initial transition tax statement but require significantly more detail. Even tax advisers who grasped the fundamentals of the initial toll tax calculations and elections will find that the new form and schedules are challenging and time-consuming. Given Treasury's silence on whether the form supersedes the transition statement, tax advisers would be well advised to submit both with their 2018 and future returns.

Listen as our experienced panel goes beyond the basics of the transition tax rules to provide a detailed, line-by-line guide to completing new Form 965 and related disclosures.

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Outline

  1. 2017 tax year filings, calculations, and elections
  2. New Form 965 and instructions
  3. Schedules
    1. Schedule A calculates a U.S. shareholder's Section 965(a) inclusion amount
    2. Schedule B lists the accumulated post-1986 earnings and profits (E&P) of a deferred foreign income corporation
    3. Schedule C reports a U.S. shareholder's pro-rata share of the aggregate foreign E&P deficits from E&P deficit foreign corporations
    4. Schedule D determines the U.S. shareholder's pro-rata share of the cash position of each specified foreign corporation (SFC)
    5. Schedule E sets out the cash position of each SFC
    6. Schedule F (2018 tax year) and Schedule G (2017 tax year) compute the foreign taxes deemed paid
    7. Schedule H determines the foreign tax credits disallowed with respect to the section 965(a) inclusion
  4. Tying 2017 transition statement to Form 965 Filing
  5. 2019 Final and Proposed Section 965 Regulations

Benefits

The panel will discuss these and other important topics:

  • Tying 2017 transition tax statement to subsequent years' Form 965 filings
  • How the 2019 regulations impact prior and current years' transition tax reporting
  • Breaking down the individual schedules attached to Form 965
  • How to handle prior year's errors in completing Form 965

Faculty

Gelernter, Josh
Josh Gelernter
International Tax Senior Manager
Withum Smith+Brown

Mr. Gelernter's specialties are international tax services, primarily reorganizations and restructurings.

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Warner, Dominick
Dominick Warner, CPA
Managing Director - International Tax
BDO USA

Mr. Warner has over 14 years of experience specializing in all phases of U.S. and international taxation with...  |  Read More

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