Formulaire 965-D Instructions
Instructions pour le formulaire 965-D, Accord de transfert en vertu de l'alinéa 965i)(2)
Rév. Décembre 2019
Formulaires associés
- Formulaire 965-D - Accord de transfert en vertu de l'alinéa 965i)(2)
Department of the Treasury
Internal Revenue Service
Instructions for Form 965-D
Transfer Agreement Under Section 965(i)(2)
(December 2019)
Section references are to the Internal Revenue Code unless
otherwise noted.
covered triggering event. References in Part IV, Part V, and Part
VII (including the signature block area) to the “transferor” are
references to the “eligible section 965(i) transferor” filing the
form.
Future Developments
Section 965(i) net tax liability. The section 965(i) net tax
liability is, with respect to an S corporation and a shareholder of
the S corporation that has made a section 965(i) election, the
excess (if any) of the S corporation shareholder's net income tax
for the taxable year in which the S corporation shareholder
includes a section 965(a) inclusion in income, determined as if
the only section 965(a) inclusions included in income by the S
corporation shareholder are domestic pass-through entity
shares of section 965(a) inclusions by the S corporation with
respect to DFICs of which the S corporation is a U.S.
For the latest information about developments related to Form
965-D and its instructions, such as legislation enacted after they
Background
On December 22, 2017, section 965 of the Code (section 965)
was amended. As a result of the amendment, certain taxpayers
are required to include in income an amount (a section 965(a)
inclusion amount) based on the accumulated post-1986 deferred
foreign income of certain foreign corporations (specified foreign
corporations) they own either directly or indirectly through other
entities. Taxpayers that are S corporation shareholders may
have inclusions in income under section 951(a) by reason of
section 965 due to ownership of deferred foreign income
corporations (DFICs) through S corporations that are
shareholder, over the S corporation shareholder's net income
tax for the taxable year determined without regard to section
965, and without regard to any income, deduction, or credit
properly attributable to a dividend received (directly or through a
chain of ownership described in section 958(a)) by the S
corporation from, or an inclusion under sections 951(a)(1)(B)
and 956 with respect to, a DFIC and paid during, or included with
respect to, the DFIC's inclusion year.
themselves U.S. shareholders of the DFICs.
For each section 965(i) net tax liability (as defined later in
these instructions), the taxpayer may elect to defer payment of
such liability until a triggering event occurs. Each section 965(i)
net tax liability is calculated and the section 965(i) election is
made on an S corporation-by-S corporation basis. If a covered
triggering event (defined below) occurs, such event will not be
considered to trigger the section 965(i) net tax liability if the
transferee enters into an agreement to be liable for the section
965(i) net tax liability with respect to the stock transferred in the
same manner as if the transferee were the original electing
taxpayer. Partial triggering events may occur if not all of the
stock of the S corporation is transferred. In the case of multiple
partial transfers, an agreement must be entered into for each
partial transfer treated as a covered triggering event.
Purpose of Form
Form 965-D should be used by an eligible section 965(i)
transferor and an eligible section 965(i) transferee to enter into a
transfer agreement under section 965(i)(2).
This form sets forth the information and representations that
must be provided to meet the requirements of Regulations
section 1.965-7(c)(3)(iv)(B)(4) in order to enter into a transfer
agreement under section 965(i)(2). If an eligible section 965(i)
transferor and an eligible section 965(i) transferee properly
complete and file this Form 965-D with respect to a covered
triggering event in accordance with these instructions, they will
be considered to have properly entered into a transfer
agreement under section 965(i)(2). However, the Commissioner
may review the transfer agreement and may ask additional
questions or require additional information, including, for
example, information about the eligible section 965(i)
General Instructions
Definitions
Covered triggering event. A covered triggering event is, with
respect to a shareholder’s section 965(i) net tax liability with
respect to an S corporation, the transfer of any share of stock of
the S corporation (including by death or otherwise) by the
shareholder that results in a change of ownership for federal
income tax purposes.
Eligible section 965(i) transferee. An eligible section 965(i)
transferee is a single U.S. person (including a person listed in
Regulations section 1.1362-6(b)(2) with respect to a trust or
estate, but not a domestic pass-through entity itself) that
becomes a shareholder of an S corporation due to a transfer
from an eligible section 965(i) transferor in a transaction that is a
covered triggering event. References in Part VI and Part VII
(including the signature block area) to the “transferee” are
references to the “eligible section 965(i) transferee” filing the
form.
transferee’s ability to pay the outstanding section 965(i) net tax
liability. If the Commissioner determines that the transfer
agreement contains a material misrepresentation or material
omission, or if the additional information requested is not
provided within a reasonable timeframe (as communicated by
the Commissioner), then the transfer agreement may be rejected
as of the date of the original triggering event. Alternatively, the
Commissioner may determine that a triggering event has
occurred as of the date the transfer agreement was found to
have a material misrepresentation or material omission.
Who Must File
The eligible section 965(i) transferor and the eligible section
965(i) transferee with respect to a covered triggering event must
file Form 965-D to meet the requirements for the eligible section
965(i) transferee exception under Regulations section 1.965-7(c)
(3)(iv). Form 965-D may only be filed by an eligible section 965(i)
transferor and eligible section 965(i) transferee.
Eligible section 965(i) transferor. An eligible section 965(i)
transferor is a shareholder of an S corporation who has a section
965(i) net tax liability with respect to the S corporation and who
transfers stock of the S corporation in a transaction that is a
Note. Where there are multiple partial transfers, separate
transfer agreements must be filed for each partial transfer
Jan 15, 2020
Cat. No. 73448A
treated as a covered triggering event. In addition, an S
covered triggering event that is the death of the eligible section
965(i) transferor, and the transfer agreement must be filed within
30 days of the covered triggering event (that is, the transfer of
shares to the beneficiary or beneficiaries).
corporation cannot file Form 965-D on behalf of its shareholders.
When and Where To File
Except in the case of a covered triggering event that is the death
of the eligible section 965(i) transferor, within 30 days of the
covered triggering event, the original Form 965-D must be
mailed to the IRS’s Memphis Compliance Service Collection
Operations at the following address.
Specific Instructions
Part I — Transferor Information
Use Part I to provide the identifying information of the transferor.
Enter the transferor’s complete legal name, taxpayer
Memphis CSCO
5333 Getwell Road MS 81
Memphis, TN 38118
identification number, and street address or post office box.
Part II — Transferee Information
In addition, both the eligible section 965(i) transferor and the
eligible section 965(i) transferee must attach a duplicate copy of
Form 965-D to their tax returns for the tax years during which the
covered triggering event occurs, filed by the due date for the
returns (with regard to any extension of time to file).
Use Part II to provide the identifying information of the
transferee. Enter the transferee’s name, taxpayer identification
number, and street address or post office box.
A transferee that is a foreign entity or a domestic
pass-through entity is not an eligible section 965(i)
!
Except in the case of death, Form 965-D will be
CAUTION
transferee. If a transfer consists of multiple partial
considered timely filed only if filed within 30 days of the
transfers, a transfer agreement must be entered into by the
eligible section 965(i) transferor and each eligible section 965(i)
transferee for each partial transfer treated as a covered
triggering event.
!
CAUTION
date that the covered triggering event occurs. No
extension of time to file Form 965-D will be granted, and relief is
not available under Regulations section 301.9100-2 or
301.9100-3 to enter into a transfer agreement late.
Part III — Identifying Information of
the S Corporation (With Respect to
Which the Section 965(i) Election
Was Effective)
A copy of the eligible section 965(i) transferor’s most recent
Form 965-A is required to be included with Form 965-D.
Special Rules in the Case of Death of the
Eligible Section 965(i) Transferor
If the covered triggering event is the death of the eligible section
965(i) transferor, certain special rules apply regarding the due
date of the transfer agreement and the identity of the eligible
section 965(i) transferee.
Use Part III to provide identifying information of the S corporation
with respect to which a section 965(i) election was in effect and
with respect to which the covered triggering event occurred.
Enter the name and taxpayer identification number of the S
corporation.
Due date of transfer agreement. If the covered triggering
event is the death of the eligible section 965(i) transferor, the
transfer agreement must be filed by the unextended due date for
the eligible section 965(i) transferor’s final income tax return.
Part IV — Triggering Event Leading to
Transfer Agreement
Eligible section 965(i) transferee. Except in the case of
transfers to trusts, if the covered triggering event is the death of
the eligible section 965(i) transferor and the identity of the
beneficiary or beneficiaries (in the case of multiple partial
transfers) is determined as of the due date for the eligible section
965(i) transferor’s final income tax return, then the transfer may
be treated as a transfer directly from the eligible section 965(i)
transferor to the beneficiary or beneficiaries (provided the
beneficiary or beneficiaries are themselves eligible section
965(i) transferees).
Line 1. Provide the date on which the covered triggering event
for which the transfer agreement is being filed occurred.
Line 2. Check the “Yes” box if the covered triggering event for
which the transfer agreement is being filed is the death of the
eligible section 965(i) transferor. Otherwise, check the “No” box.
A transfer from an estate to the original eligible section
965(i) transferor’s beneficiary or beneficiaries is not a
!
CAUTION
covered triggering event that is the death of the eligible
section 965(i) transferor.
If, however, the identity of the beneficiary or beneficiaries is
not determined as of the due date for the eligible section 965(i)
transferor’s final income tax return, then the transfer must be
treated as two transfers: first, a transfer from the eligible section
965(i) transferor to his or her estate that occurs at the time of
death; and second, a transfer from the estate to the beneficiary
or beneficiaries that occurs when the shares are actually
transferred. Separate transfer agreements must be filed for each
transfer.
Line 3. If the covered triggering event is a partial transfer,
provide the percentage of the section 965(i) net tax liability
attributable to the stock being transferred. If the covered
triggering event is the transfer of all of the stock of the S
corporation, enter 100.00%.
Line 4. Describe in detail the covered triggering event for which
the transfer agreement is being filed. For example, indicate
whether the covered triggering event is a transfer pursuant to a
sale, gift, or other disposition, or whether the covered triggering
event is the death of the eligible section 965(i) transferor.
Note. Where the transfer is treated as two transfers, the transfer
from the eligible section 965(i) transferor to his or her estate is
treated as a transfer resulting from a covered triggering event
that is the death of the eligible section 965(i) transferor, and the
transfer agreement must be filed by the due date for the eligible
section 965(i) transferor’s final income tax return (with regard to
any extension of time to file). The transfer from the estate to the
beneficiary or beneficiaries is not a transfer resulting from a
-2-
Part V — Report of Unpaid Section
965(i) Net Tax Liability or Portion
Thereof Attributable to Transferred
Stock
Transferor Signature
This transfer agreement must be signed by a person who is
authorized to sign a return on behalf of the eligible section 965(i)
transferor. By signing this transfer agreement, you declare,
under penalties of perjury, that you have examined the form, and
to the best of your knowledge and belief, Parts I, III, IV, and V are
true, correct, and complete. You also certify that you have the
authority to execute this transfer agreement.
Line 5. Enter the dollar amount of the eligible section 965(i)
transferor’s section 965(i) net tax liability being assumed by the
eligible section 965(i) transferee.
Transferee Signature
This transfer agreement must be signed by a person who is
authorized to sign a return on behalf of the eligible section 965(i)
transferee. By signing this transfer agreement, you declare,
under penalties of perjury, that you have examined the form, and
to the best of your knowledge and belief, Parts II, III, IV, V, and VI
are true, correct, and complete. You also certify that you have
the authority to execute this transfer agreement.
Note. The Commissioner may adjust the amount of the eligible
section 965(i) transferor’s section 965(i) net tax liability.
Part VI —Transferee’s Ability To Pay
Remaining Liability
Line 6. Check the “Yes” box to confirm that the transferee is
able to pay the section 965(i) net tax liability being assumed by
the transferee. If you check the “No” box, you do not meet the
requirements to enter into a valid transfer agreement.
Line 7. Check the “Yes” box if the leverage ratio of the eligible
section 965(i) transferee exceeds three to one. Otherwise, check
the “No” box. The leverage ratio means the ratio that the total
indebtedness of the eligible section 965(i) transferee bears to
the sum of its money and all other assets reduced, but not below
zero, by the total indebtedness. See Regulations section
1.965-7(c)(3)(iv)(B)(6) for more information.
Paperwork Reduction Act Notice
We ask for the information on this form to carry out the Internal
Revenue laws of the United States. You are required to give us
the information. We need it to ensure that you are complying
with these laws and to allow us to figure and collect the right
amount of tax.
You are not required to provide the information requested on
a form that is subject to the Paperwork Reduction Act unless the
form displays a valid OMB control number. Books or records
relating to a form or its instructions must be retained as long as
their contents may become material in the administration of any
Internal Revenue law. Generally, tax returns and return
Note. The leverage ratio of the eligible section 965(i) transferee
is a factor the Commissioner uses to determine whether the
eligible section 965(i) transferee has the ability to pay the
outstanding section 965(i) net tax liability. A leverage ratio in
excess of three to one does not by itself determine whether or
not a transfer agreement is valid.
information are confidential, as required by section 6103.
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated burden
for individual taxpayers filing this form is approved under OMB
control number 1545-0123 and is included in the estimates
shown in the instructions for their business income tax return.
Line 8. Provide any other pertinent information regarding the
eligible section 965(i) transferee’s ability to pay the section
965(i) net tax liability being assumed. This information may
include, but is not limited to, the adequacy of the transferee’s
income, the value of the transferee’s assets, and the transferee’s
access to capital.
Part VII — Terms of Agreement
By signing this transfer agreement, the eligible section 965(i)
transferor and the eligible section 965(i) transferee agree to the
terms set forth in Part VII of Form 965-D.
-3-