Formulaire 965-E Instructions
Instructions pour le formulaire 965-E, Entente de consentement en vertu de l'alinéa 965i)(4)D)
Rév. Décembre 2019
Formulaires associés
- Formulaire 965-E - Accord de consentement en vertu de l'alinéa 965i)(4)D)
Department of the Treasury
Internal Revenue Service
Instructions for Form 965-E
Consent Agreement Under Section 965(i)(4)(D)
(December 2019)
Section references are to the Internal Revenue Code unless
otherwise noted.
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.
Section 965(i)(2)(A)(ii) triggering event. A section 965(i)(2)
(A)(ii) triggering event is, with respect to an S corporation with
one or more shareholders that have made section 965(i)
elections, the liquidation, sale, exchange, or other disposition of
substantially all of the assets of the S corporation (including in a
title 11 or similar case), the cessation of business of the S
corporation, or the S corporation ceasing to exist.
Future Developments
For the latest information about developments related to Form
965-E 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.
Purpose of Form
Form 965-E should be used by a shareholder in an S corporation
who has an outstanding section 965(i) net tax liability with
respect to which a section 965(i)(2)(A)(ii) triggering event has
occurred to obtain consent to make a section 965(h) election as
required by section 965(i)(4)(D) and Regulations section
1.965-7(c)(3)(v)(D)(1).
Taxpayers that are S corporation shareholders may have a
section 965(a) inclusion amount due to ownership of deferred
foreign income corporations (DFICs) through S corporations that
are themselves U.S. shareholders of the DFICs. A taxpayer that
is a shareholder in an S corporation that is a U.S. shareholder of
a DFIC and that has a section 965(i) net tax liability (as defined
later in these instructions) with respect to the S corporation may
make a deferral election under section 965(i) (section 965(i)
election). A shareholder’s section 965(i) net tax liability with
respect to an S corporation is calculated on an individual S
corporation basis, and the section 965(i) election is also made
on an S corporation-by-S corporation basis and on a
This form requests the information and representations that
must be provided to meet the requirements of Regulations
section 1.965-7(c)(3)(v)(D)(1) in order to enter into a consent
agreement under section 965(i)(4)(D). If the shareholder
properly completes and files Form 965-E in accordance with
these instructions, the shareholder will be considered to have
properly obtained consent under section 965(i)(4)(D). However,
the Commissioner may review the consent agreement and may
ask additional questions or require additional information,
including, for example, about the shareholder’s ability to make
the payments required under section 965(h) with respect to the
outstanding section 965(i) net tax liability covered by the consent
agreement. If the Commissioner determines that the consent
agreement contains a material misrepresentation or material
omission, or if the additional information is not provided within a
reasonable timeframe (as communicated by the Commissioner),
then the consent agreement may be rejected as of the date of
the triggering event. If the consent agreement is rejected, the
entire amount of the section 965(i) net tax liability with respect to
which the triggering event occurred will be due and payable for
the year the triggering event occurred.
shareholder-by-shareholder basis. A section 965(i) election
allows a shareholder in an S corporation to defer payment of its
section 965(i) net tax liability until a triggering event occurs. In
addition, when a triggering event occurs, the shareholder may
then make an election under section 965(h) (section 965(h)
election) to pay the section 965(i) net tax liability with respect to
which the triggering event occurred in installments over 8 years.
However, when the triggering event is a liquidation, sale,
exchange, or other disposition of substantially all the assets of
the S corporation (including in a title 11 or similar case), a
cessation of business by the S corporation, or the S corporation
ceasing to exist, then the shareholder must obtain the consent of
the Commissioner in order to make the section 965(h) election.
Form 965-E is only the consent agreement under section
965(i)(4)(D) required by Regulations section 1.965-7(c)
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CAUTION
(3)(v)(D)(1). It does not include the section 965(h)
election for which consent is requested. You must separately
make the section 965(h) election in accordance with the
requirements in Regulations section 1.965-7(c)(3)(v)(b)(2). If you
do not properly make the section 965(h) election, you will be
required to pay the full amount of the section 965(i) net tax
liability with respect to which the triggering event occurred for the
year the triggering event occurred.
General Instructions
Definitions
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 tax 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
Who Must File
An S corporation shareholder with an outstanding section 965(i)
net tax liability with respect to which a section 965(i)(2)(A)(ii)
triggering event has occurred must file Form 965-E to obtain
consent to make a section 965(h) election.
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.
shareholder, over the S corporation shareholder's net income
tax for the tax 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
Note. Each shareholder must file its own Form 965-E to obtain
consent to make a section 965(h) election, and each
shareholder must make its own section 965(h) election. An S
corporation cannot file Form 965-E or make section 965(h)
elections on behalf of its shareholders.
Jan 20, 2020
Cat. No. 73449L
When and Where To File
Part V — Shareholder’s Ability To
Make Payments Required Under
Section 965(h)
Within 30 days of the section 965(i)(2)(A)(ii) triggering event, the
original Form 965-E must be mailed to the IRS’s Memphis
Compliance Service Collection Operations at the following
address.
Line 5. Check the “Yes” box to confirm that the shareholder is
able to make the payments required under section 965(h) and
Regulations section 1.965-7(b) for the outstanding section 965(i)
net tax liability with respect to which the section 965(h) election
is intended to be made. If you check the “No” box, you do not
meet the requirements to enter into a valid consent agreement.
Memphis CSCO
5333 Getwell Road MS 81
Memphis, TN 38118
In addition, the shareholder must attach a duplicate copy of
Form 965-E to its tax return for the tax year during which the
section 965(i)(2)(A)(ii) triggering event occurs, filed by the due
date for such return (with regard to any extension of time to file).
Line 6. Check the “Yes” box if the leverage ratio of the
shareholder immediately after the triggering event exceeds three
to one. Otherwise, check the “No” box.
The leverage ratio means the ratio that the total indebtedness
of the shareholder 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)(D)(6) for more
information.
Form 965-E will be considered timely filed only if filed
within 30 days of the date the section 965(i)(2)(A)(ii)
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CAUTION
triggering event occurs. No extension of time to file Form
965-E will be granted, and relief is not available under
Regulations section 301.9100-2 or 301.9100-3 to file a consent
agreement late.
Note. The leverage ratio of the shareholder is a factor the
Commissioner uses to determine whether the shareholder 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 consent agreement is valid.
Specific Instructions
Part I — Shareholder Information
Line 7. Provide any other pertinent information regarding the
shareholder’s ability to pay the outstanding section 965(i) net tax
liability. This information may include, but is not limited to, the
adequacy of the shareholder’s income, the value of the
Use Part I to provide the identifying information of the
shareholder requesting consent to make the section 965(h)
election. Enter the shareholder’s complete legal name, taxpayer
identification number, and street address or post office box.
shareholder’s assets, and the shareholder’s access to capital.
Part II — S Corporation Information
Part VI — Terms of Agreement
Use Part II 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 section 965(i)(2)(A)(ii) triggering event
occurred. Enter the name and taxpayer identification number of
the S corporation.
By signing this consent agreement, you agree to the terms set
forth in Part VI of Form 965-E.
Shareholder Signature
The consent agreement must be signed by the shareholder or a
person authorized to sign for the shareholder. By signing this
consent agreement, you declare, under penalties of perjury, that
you have examined the form and, to the best of your knowledge
and belief, it is true, correct, and complete. You also certify that
you have the authority to execute this consent agreement.
Part III — Triggering Event Under
Section 965(i)(2)(A)(ii) Giving Rise to
Need for Consent
Line 1. Provide the date on which the section 965(i)(2)(A)(ii)
triggering event for which the consent agreement is being filed
occurred.
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.
Line 2. Describe in detail the section 965(i)(2)(A)(ii) triggering
event for which the consent agreement is being filed. For
example, if the transfer is the disposition of substantially all of
the assets of the S corporation, provide a description of the type
of disposition, including any steps involved in the transaction.
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
Part IV — Report of Unpaid Section
965(i) Net Tax Liability for Which
Consent Is Requested Under Section
965(i)(4)(D) for a Section 965(h)
Election To Be Made
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 3. Enter the dollar amount of the outstanding section 965(i)
net tax liability for which the shareholder intends to make a
section 965(h) election.
Note. The Commissioner may adjust the amount of the section
965(i) net tax liability.
Line 4. Enter the date on which the first installment payment will
be due for the section 965(i) net tax liability after the section
965(h) election is made.
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