Facing an IRS Section 965 Transition Tax Audit? Maybe a 962 Election Can Save the Day
By Anthony Diosdi Recently, the Internal Revenue Service or “IRS” launched a compliance campaign that targets individual compliance with the Section 965 transition tax through examinations and correspondences. The IRS announced it will be expanding Section 965 examinations. This article discusses the 965 transition tax and the use of a 962 election which could significantly reduce a transition tax assessment.The Section 965 Transition TaxInternal Revenue Code Section 965 imposes a one-time transition tax on a U.S. shareholder’s share of deferred foreign income of certain foreign corporation’s accumulated deferred foreign income of certain foreign corporation’s accumulated deferred foreign income or “ADFI.” Section 965 generally requires that, for the last taxable year of a foreign corporation beginning January 1, 2018, all “U.S. Shareholders of any controlled foreign corporation or “CFC” or other…
