IRS updates FAQs on transition tax, providing guidance on transfer agreements

Tax Hot Topics newsletter The IRS updated its frequently asked questions (FAQs) page on the Section 965 transition tax on Nov. 6, providing new guidance relating to transfer agreements under Sections 965(h)(3) and 965(i)(2)(C). A transfer agreement may be filed by a taxpayer who experienced a triggering event and wishes to avoid the acceleration of payment of its remaining installments from an election made under Section 965(h) or to avoid the triggering of tax liability that has been deferred under Section 965(i). Under the proposed Section 965 regulations, certain events will not be treated as a triggering event if an eligible transferee enters into a transfer agreement.

In the updated FAQ, the newly-added questions 18, 19 and 20 provide guidance on the time, place and manner for filing these transfer agreements under the proposed Section 965 regulation. Under these regulations, a transfer agreement must be timely filed within 30 days of the date that the acceleration event occurs (i.e., triggering event). The FAQs clarify that a transfer agreement will be considered timely filed if done so by the date provided in the final regulations under Section 965.

For previous Grant Thornton coverage of the proposed Section 965 regulations click here.

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

Cory Perry
Senior Manager, Washington National Tax Office
T +1 202 521 1509

Mike Del Medico
Manager, Washington National Tax Office
T +1 202 521 1522

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