IRS explains calculating new transition tax

Tax Hot Topics: Tax reform Section 965 clarified

Tax Hot Topics newsletterIRS releases publication on how to calculate Section 965 amounts and make elections On April 6, the IRS issued Publication 5292 explaining how to calculate the Section 965 transition tax enacted by the tax reform legislation, the so-called Tax Cuts and Jobs Act.

Section 965 generally requires U.S. shareholders to pay a transition tax on the untaxed earnings of certain specified foreign corporations. The information contained in the publication provides a summary of various components and computations contained in Section 965. The publication is consistent with items described in previously issued notices and other administrative guidance released by the IRS.

Among other things, the publication:
  • Explains who may be required to report Section 965 amounts
  • Defines numerous key items for purposes of Section 965
  • Summarizes what elections can be made under Section 965
  • Provides a detailed workbook to assist taxpayers in calculating Section 965 amounts

For more information on Section 965, check Grant Thornton’s prior coverage of Notice 2018-07; Notice 2018-13; Notice 2018-26; Revenue Procedure 2018-17, and the FAQ.

David Sites
Partner, Washington National Tax Office
T +1 202 861 4104

David Zaiken
Managing Director, Washington National Tax Office
T +1 202 521 1543

Cory Perry
Tax – Exp. Manager, Washington National Tax Office
T +1 202 521 1509

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