Eversheds Sutherland Legal Insights (audio)

Proposed regulations addressing the amendment and application of section 965 of the Internal Revenue Code of 1986, as amended, were recently issued. Section 965 generally imposes a transition tax on a US shareholder’s pro rata share of the accumulated earnings and profits of a specified foreign corporation. The proposed regulations provide specific requirements for making elections regarding the application of section 965, which generally are required to be made with a taxpayer’s 2017 federal income tax return for calendar-year taxpayers (or by October 9, 2018, for taxpayers that did not file for extensions). This Bottom Line videocast discusses: two important examples in the proposed regulations addressing the application of the gain reduction and basis adjustment rules for distributions from a specified foreign corporation during an inclusion year the election to shift basis to reflect the sharing of deficits under section 965 the implication of variations to fact patterns