Форма 965 Інструкція
Інструкція по формуванню 965, прикусу відстроченого зовнішньоекономічного доходу при переході до системи відключення участі
Рев. Січень 2021
Пов'язані форми
- Форма 965 - Включення деферованого зовнішньоторговельного доходу при переході на систему відчуження участі
Department of the Treasury
Internal Revenue Service
Instructions for Form 965
(Rev. January 2021)
Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption
System
Section references are to the Internal Revenue Code unless
otherwise noted.
through pass-through entities that are U.S. shareholders of
DFICs:
Section 965(a) inclusion,
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•
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Contents
Page
Section 965(c) deduction,
Applicable percentage for disallowance of foreign taxes, and
If applicable, foreign taxes deemed paid, and foreign taxes
deemed paid that are disallowed under section 965(g), in
connection with a section 965(a) inclusion derived through
pass-through entities that are U.S. shareholders of DFICs.
Reminders
On December 22, 2017, section 965 of the Code (section 965)
was amended by section 14103 of the Tax Cuts and Jobs Act
(TCJA) (P.L. 115-97). As a result of the amendment, certain
taxpayers are required to include in income an amount (section
965(a) inclusion amount) based on the accumulated post-1986
deferred foreign income of certain foreign corporations of which
they are U.S. shareholders, either directly or indirectly through
other entities. Other taxpayers may have inclusions in income
under section 951(a) by reason of section 965 due to ownership
themselves U.S. shareholders of DFICs. When referring to both
amounts in the preceding two sentences, the Form 965 and
these instructions use the term “section 965(a) inclusion.”
Section 965 also allows for a deduction (section 965(c)
deduction). Section 965(a) inclusions and corresponding section
965(c) deductions are taken into account in the U.S.
Schedule F – Foreign Taxes Deemed Paid by
Schedule H, Section 1 – Amounts Reported
on Forms 1116 and 1118 and Disallowed
Future Developments
shareholder’s year that includes the last day of the relevant
foreign corporation’s last tax year that began before January 1,
2018.
For the latest information about developments related to Form
965, its separate schedules, and its instructions, such as
legislation enacted after they were published, go to IRS.gov/
General Instructions
What's New
Purpose of Form
Most of the lines on Form 965 are reserved. For 2020 tax years
(defined later), Form 965 will be used only for section 965(a)
inclusions derived solely through interests in pass-through
entities that are U.S. shareholders of deferred foreign income
corporations (DFICs), defined later. In these cases, the taxpayer
or other filer will complete the January 2021 revision of Form
965, and, if applicable, Schedule F (Form 965), and Schedule H
(Form 965).
Use the January 2021 revision of Form 965 and the December
2020 revisions of separate Schedules F and H to report:
2020 tax year share of section 965(a) inclusions from
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pass-through entities,
2020 tax year share of section 965(c) deductions from
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pass-through entities,
2020 tax year share of foreign taxes deemed paid in
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connection with the 2020 tax year share of section 965(a)
inclusions from pass-through entities, and
As a result of the above changes, for 2020 tax years,
Schedule F (Form 965) has also been revised. Schedule F,
line 16 (total not from pass-throughs), has been deleted. Former
line 17 (total from pass-throughs) of Schedule F has been
renumbered as new line 16. For 2020 tax years, Schedule F is
only for use by filers that have a section 965(a) inclusion solely
through interests in pass-through entities that are U.S.
shareholders of DFICs, and either:
2020 tax year foreign taxes disallowed under section 965(g)
•
with respect to foreign taxes deemed paid in connection with the
2020 tax year share of section 965(a) inclusions from
pass-through entities.
Also use separate Schedule H to report the applicable
percentage for disallowance of foreign taxes.
Are eligible to claim a deemed-paid foreign tax credit under
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Definitions
2020 tax years. Throughout these instructions, the term “2020
tax year” refers to 2020 calendar years and fiscal tax years of the
person filing Form 965 and related schedules that begin in 2020.
section 960 with respect to such section 965(a) inclusion; or
Are pass-through entities, the owners or beneficiaries of
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which may be able to claim such a deemed-paid foreign tax
credit.
Most of the lines on Schedule H remain reserved.
Controlled foreign corporation (CFC). A CFC is any foreign
corporation if more than 50% of the total combined voting power
of all classes of stock or 50% of the total value of the stock of the
foreign corporation is owned (directly, indirectly, or
For 2020 tax years, Schedule H is used only to report the
following amounts with respect to section 965(a) inclusions
Nov 02, 2020
Cat. No. 71282A
constructively) by U.S. shareholders (defined later) on any day
during the tax year of the foreign corporation.
such U.S. shareholder pass-through entities for 2020 tax years
from the U.S. shareholder pass-through entities and report those
amounts on Form 965, Part I, line 3.
Deferred foreign income corporation (DFIC). A DFIC is, with
respect to any U.S. shareholder, any specified foreign
corporation (SFC) (defined later) of the U.S. shareholder that
has accumulated post-1986 deferred foreign income as of
November 2, 2017, or December 31, 2017, that is greater than
zero.
Section 965(c) deductions/aggregate foreign cash
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position. Owners and beneficiaries of U.S. shareholder
pass-through entities should receive information about their
shares of the section 965(c) deductions of such U.S.
shareholder pass-through entities for 2020 tax years from the
U.S. shareholder pass-through entities and report those
amounts on Form 965, Part II, line 17.
Specified foreign corporation (SFC). An SFC is (i) any CFC
and (ii) any foreign corporation with respect to which one or
more domestic corporations is a U.S. shareholder. However, if a
passive foreign investment company (as defined in section
1297) with respect to the shareholder is not a CFC, then such
corporation is not an SFC. See Regulations section 1.965-1(f)
(45)(ii) for a special attribution rule for purposes of determining
whether a foreign corporation is an SFC within the meaning of
section 965(e)(1)(B).
Deemed-paid foreign taxes and disallowance
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(Schedules F and H).
1. Owners and beneficiaries eligible to claim
deemed-paid credits. Eligible individuals making a section 962
election, and domestic corporations, should use Schedules F
and H to determine the foreign taxes deemed paid with respect
to their share of section 965(a) inclusions from U.S. shareholder
pass-through entities and the portion of such deemed-paid
foreign taxes disallowed under section 965(g). Under section
962 and Regulations sections 1.962-1 and 1.962-2, an individual
U.S. shareholder of a CFC may elect for a tax year to be taxed at
corporate rates under section 11 on amounts included in his or
her gross income under section 951(a) and to claim a foreign tax
credit for foreign income taxes deemed paid with respect to such
amounts under sections 902 and 960.
United States shareholder (U.S. shareholder). For tax years
of foreign corporations beginning before January 1, 2018, a U.S.
shareholder is a U.S. person who owns (directly, indirectly, or
constructively) 10% or more of the total combined voting power
of all classes of stock of a foreign corporation. A U.S. person for
this purpose is defined in section 957(c).
Who Must File
2. Non-pass-through entity owners and beneficiaries
ineligible to claim deemed-paid credits. Even if the owner or
beneficiary of a U.S. shareholder pass-through entity is ineligible
to claim deemed-paid credits, the owner or beneficiary should
still complete Schedule H, lines 3, 6 and 11. The applicable
percentage from pass-throughs is relevant for purposes of
determining the disallowed portion of foreign taxes paid or
accrued on distributions of previously taxed earnings and profits
with respect to section 965(a) inclusions. Furthermore, the
amounts of the section 965(a) inclusion and the section 965(c)
deduction derived through pass-throughs are relevant in
determining foreign source taxable income for purposes of the
foreign tax credit limitation with respect to other foreign tax credit
claims.
An owner or beneficiary need not complete Schedule F if it is
not a pass-through entity and is ineligible to claim deemed-paid
credits. Similarly, such an owner or beneficiary need not
complete lines 9 and 14 of Schedule H.
3. Pass-through entity owners and beneficiaries. If the
filer of Form 965 is itself a pass-through entity, the filer should
complete Schedule F and Schedule H if one or more of its
owners or beneficiaries might be eligible to claim deemed-paid
credits under section 960 with respect to its share of the U.S.
shareholder pass-through entity’s section 965(a) inclusion. If no
owner or beneficiary of the U.S. shareholder pass-through entity
is eligible to claim deemed-paid credits, the pass-through entity
need not complete Schedule F or lines 9 and 14 of Schedule H,
but must complete Schedule H, lines 3, 6 and 11.
Any person that is required to include amounts in income under
because the person is a direct or indirect partner in a domestic
partnership, a shareholder in an S corporation, or a beneficiary
of another pass-through entity, and such pass-through entity is a
U.S. shareholder of a DFIC, must complete and attach Form 965
and, as applicable, separate Schedules F and H to its income
tax return.
Exception. An organization exempt from tax under section
501(a) is required to complete Form 965 only if the section 965
amounts are subject to tax under section 511 (unrelated
business income) or section 4940 (private foundation investment
income).
When and Where To File
Attach Form 965 and separate Schedules F and H, if applicable,
to your income tax return (or other applicable form, such as a
partnership or exempt organization return) and file both by the
due date (taking into account extensions, if any) for that return.
Electronic Filing of Form 965
If you file your income tax return electronically, Form 965 and
separate Schedules F and H are filed with the electronic income
tax return. See the instructions for your income tax return for
general information about electronic filing.
Corrections to Form 965
If you file a Form 965 and separate Schedules F and H that you
later determine are incomplete or incorrect, file a corrected Form
965 and separate Schedules F and H with an amended tax
return, using the amended return instructions for the return with
which you originally filed Form 965. Write “corrected” at the top
of the Form 965 and separate Schedules F and H and attach a
statement identifying the changes.
Important. Form 965 is completed once. Separate Schedules F
and H may be completed more than once (for each applicable
separate category of income).
Separate categories of income. Schedules F and H have
lines a and b at the top of page 1 of the schedule. These lines
are used to identify the separate category for which the schedule
is being completed. If more than one category of income applies,
the schedule must be completed more than once. See
How To Complete
Categories of Income in the Instructions for Form 1118, Foreign
Tax Credit–Corporations, or the Instructions for Form 1116,
Foreign Tax Credit (Individual, Estate, or Trust), for the separate
category code to be entered on line a. If code 901j is entered on
line a, also see those instructions for the country code of the
sanctioned country to be entered on line b. If there are multiple
All U.S. persons required to include the following amounts in
income for their 2020 tax year should file Form 965 and, if
applicable, separate Schedules F and H.
Section 965(a) inclusions. Owners and beneficiaries of U.S.
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shareholder pass-through entities should receive information
about their shares of the section 965(a) inclusion amounts of
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Instructions for Form 965 (Rev. 01-2021)
sanctioned countries, leave line b blank and fill out the schedule
taking into account all sanctioned countries and attach separate
completed schedules by country in PDF format. Attached files
should be named in the following format: “F965 [relevant
schedule] 901j [country code] [identification number].” For
example, an attached Schedule H would be named: “F965 Sch
H 901j [country code] [identification number]”.
Schedule F – Foreign Taxes Deemed
Paid by Domestic Corporation (2020
Tax Year)
Use Schedule F to provide the information necessary to
compute foreign taxes deemed paid in the 2020 tax year by an
eligible domestic corporation or an individual with respect to
section 965(a) inclusions derived through pass-through entities
that are U.S. shareholders of DFICs. Taxpayers eligible for a
deemed-paid credit include certain individuals who make an
election under section 962 and certain domestic corporations.
(See section 902 for eligibility requirements.) U.S. shareholder
pass-through entities with owners or beneficiaries that are
eligible to claim deemed-paid credits should provide the owner
or beneficiary with the information necessary to make the
deemed-paid credit calculations. Also use Schedule F to provide
information necessary to compute foreign taxes deemed paid if
the owner or beneficiary is itself a pass-through entity that may
have owners or beneficiaries eligible to claim deemed-paid
credits.
Specific Instructions
Important. If the information required in a given section
exceeds the space provided within that section, do not write
“see attached” in the section and then attach all of the
information on additional sheets. Instead, complete all entry
spaces in the section and attach the remaining information on
additional sheets. The additional sheets must conform with the
IRS version of that section.
Part I – Section 965(a) Inclusion
Lines 1, 2, 4, 5, and 6. Reserved.
Lines a and b. Complete a separate Schedule F for each
applicable separate category of income. Enter the appropriate
code on line a (at the top of Schedule F). To determine the
appropriate code, see Categories of Income in the Instructions
for Form 1118, Foreign Tax Credit—Corporations, or the
Instructions for Form 1116, Foreign Tax Credit (Individual,
Estate, or Trust). If code 901j is entered on line a, enter on line b
the country code for the sanctioned country using the two-letter
multiple sanctioned countries, see Separate categories of
income, earlier.
Line 3. Shares of section 965(a) inclusion amounts allocated to
a taxpayer from U.S. shareholder pass-through entities are
entered on line 3 for the 2020 tax year. Attach a schedule setting
forth each of these shares by U.S. shareholder pass-through
entity and DFIC.
Enter the amount from line 3 on your tax return as follows.
Corporations: Enter the amount from Form 965, line 3, on
Form 1120, Schedule C, line 15, column (a), or on the
corresponding line of other corporate income tax returns.
Individuals: Enter the amount from Form 965, line 3, minus
the amount from Form 965, line 17, on the “other income” line of
your tax return (that is, Schedule 1 (Form 1040), line 8).
All others: If filing a return other than a corporate income tax
return or an individual income tax return, follow the form
instructions for that other applicable return.
In the first column, enter the name of the DFIC with respect to
which the taxpayer filing the Schedule F derives a section 965(a)
inclusion through pass-through entities that are U.S.
shareholders of DFICs.
Column (a). Enter the EIN or reference ID number of the
foreign corporation. For basic information about reference ID
numbers (including the requirements as to the characters
permitted), see the Instructions for Form 1118.
Part II, Section 1 – Section 965(c)
Deduction by Tax Year
Lines 7 through 16. Reserved.
Column (b). Owners or beneficiaries of U.S. shareholder
pass-through entities should provide the EIN or reference ID
number of the Schedule K-1 issuer. A U.S. shareholder
pass-through entity with a section 965(a) inclusion amount with
respect to a DFIC should complete all columns with the
exception of columns (g) and (l) and provide a copy to its owners
or beneficiaries that are eligible to claim deemed-paid credits or
to pass-through entities with owners or beneficiaries that may be
eligible to claim deemed-paid credits.
Line 17. Enter the 2020 tax year shares of section 965(c)
deductions allocated to a taxpayer from U.S. shareholder
pass-through entities. Attach a schedule setting forth each of
these shares by U.S. shareholder pass-through entity.
Enter the amount from line 17 on your tax return as follows.
Corporations: Enter the amount from Form 965, line 17, on
Form 1120, Schedule C, line 15, column (c), or on the
corresponding line of other corporate income tax returns.
Individuals: As indicated in the instructions for Part I, line 3,
above, enter the amount from Form 965, line 3, minus the
amount from Form 965, line 17, on the “other income” line of
your tax return (that is, Schedule 1 (Form 1040), line 8).
All others: If filing a return other than a corporate income tax
return or an individual income tax return, follow the form
instructions for that other applicable return.
Column (c). Enter the year and month in which the DFIC's U.S.
tax year ended using the format YYYYMM.
Column (d). Enter the applicable two-letter code from the list at
Column (e)(1). Report (in U.S. dollars) the section 965(a)
inclusion with respect to the DFIC for the tax year indicated in
column (c).
Part III – Elections
Column (e)(2). Report the column (e)(1) amounts, translated
from U.S. dollars into functional currency at the spot rate as of
December 31, 2017, entered on the relevant row on Schedule A,
column (d). If the foreign corporation's functional currency is the
U.S. dollar, report the same amount as in column (e)(1).
Indicate in this part whether or not any of the listed elections
were made. Elections for 2020 tax years should be made in the
manner set forth in regulations under section 965. A person
generally makes an election with respect to section 965 by
attaching to a tax return a statement signed under penalties of
perjury and, in the case of an electronically filed return, in
Portable Document Format (PDF), for each such election.
Column (f). Enter the foreign corporation's post-1986
undistributed earnings for the separate category for which the
Schedule F is being completed. Generally, this amount is the
corporation's E&P (computed in the corporation's functional
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Instructions for Form 965 (Rev. 01-2021)
currency according to sections 964(a) and 986) accumulated in
tax years beginning after 1986, determined as of the close of the
corporation's tax year without reduction for any earnings
distributed or otherwise included in income (that is, under
section 304, 367(b), 951(a), 1248, or 1293) during the current
tax year.
Line 3. Enter the total amount of section 965(a) inclusions in
U.S. dollars derived through U.S. shareholder pass-through
entities for the 2020 tax year from Schedule F, column (e)(1),
line 16, by separate category.
For example, Domestic Partnership has a $20 general
category section 965(a) inclusion amount with respect to direct
ownership in a DFIC. With respect to Domestic Corporation’s
25% interest in Domestic Partnership, Domestic Corporation
enters $5 on line 3 of Schedule H, Section 1, with respect to
general category income.
The line 3 amount represents the total amount of section
965(a) inclusions for the separate category. Enter this amount
here and on the applicable Form 1116, Part I, or Form 1118,
Schedule A.
In the example above, Domestic Corporation has total
general category section 965(a) inclusions of $5 and will enter
this amount on the general category Form 1118, Schedule A.
Domestic Partnership is ineligible to claim deemed-paid credits
and will not file either Form 1116 or Form 1118.
Post-1986 undistributed earnings are reduced to account for
distributions or deemed distributions that reduced E&P and
inclusions that resulted in previously taxed amounts described in
section 959(c)(1) and (2) or section 1293(c) in prior tax years
beginning after 1986. See Regulations section 1.902-1(a)(9).
Also see section 902(c)(3) and Regulations section 1.902-1(a)
(13) for special rules treating earnings accumulated in post-1986
years as pre-1987 accumulated profits when no U.S.
shareholder was eligible to claim a deemed-paid credit with
respect to taxes paid by the foreign corporation.
Column (h). Enter the opening balance in the foreign
corporation's post-1986 foreign income taxes for the tax year
indicated in column (c). Generally, this amount is the foreign
income taxes paid, accrued, or deemed paid (in U.S. dollars) by
the foreign corporation for prior tax years beginning after 1986,
reduced by foreign taxes attributable to distributions or
inclusions of earnings in prior tax years. See Regulations section
1.902-1(a)(8)(i).
Lines 4 and 5. Reserved.
Line 6. Enter the section 965(c) deduction in U.S. dollars
derived through U.S. shareholder pass-through entities for the
2020 tax year.
Column (i). Enter the foreign income taxes paid or accrued by
the foreign corporation for the tax year indicated in column (c),
translated into U.S. dollars using the exchange rate specified in
section 986(a).
For example, if Domestic Corporation reports on Form 965,
Part II, Section 1, line 17, that it has a section 965(c) deduction
of $3 with respect to section 965(a) inclusions derived through
U.S. shareholder pass-through entities, it will need to allocate
and apportion this deduction to reduce its section 965(a)
inclusions in each separate category.
Column (j). Enter the foreign income taxes deemed paid (under
section 902(b)) by the foreign corporation for the tax year
indicated in column (c).
Lines 7 and 8. Reserved.
Line 9. Enter the amount from Schedule F, column (l), line 16.
Also report on Form 1118, Schedule B, Part I, column 3.
Taxpayers or other filers not required to complete Schedule F
Note. Columns (h), (i), (j), and (k) are not reduced by foreign
taxes attributable to distributions or inclusions of earnings in the
2020 tax year.
Line 16. In column (e)(1), enter the total amount of section
965(a) inclusions that are derived through U.S. shareholder
pass-through entities. A U.S. person’s share of a U.S.
shareholder pass-through entity’s section 965(a) inclusion
amount must be included in this total.
Line 10. Reserved.
Line 11. Enter the applicable percentage from a U.S.
shareholder pass-through entity.
Note. Schedule H (Form 965), line 11 instructs filers to “enter
the 2019 applicable percentage from pass-throughs.” Please
disregard “2019” and instead use the following instruction.
The applicable percentage from a U.S. pass-through entity is
calculated by each U.S. shareholder pass-through entity that
has a section 965(a) inclusion amount. The applicable
percentage was reported on such U.S. shareholder
In column (l), only enter taxes deemed paid with respect to
the filer’s share of a U.S. shareholder pass-through entity’s
section 965(a) inclusion amount in this total if the filer is eligible
to claim a deemed-paid credit with respect to such amount.
Schedule H, Section 1 – Amounts
Reported on Forms 1116 and 1118
and Disallowed Foreign Taxes
pass-through entity’s 2018 Form 965, Schedule H, Section 2,
line 37 and/or line 46. The U.S. shareholder pass-through entity
should provide the applicable percentage to its owners and
beneficiaries that are eligible to claim a foreign tax credit
(whether directly under section 901 or indirectly under sections
902 and 960). If the filer has an interest in only one such U.S.
shareholder pass-through entity, enter the applicable
percentage on line 11. If the filer has an interest in multiple U.S.
shareholder pass-through entities with section 965(a) inclusion
amounts, attach a schedule setting forth the applicable
percentage for each U.S. shareholder pass-through entity and
leave this line blank.
See the Instructions for Form 1116, Form 1118, and Form 5471
(Information Return of U.S. Persons With Respect to Certain
Foreign Corporations) for reporting the amount of foreign taxes
disallowed with respect to distributions of section 965 previously
taxed E&P.
Lines a and b. Complete a separate Schedule H for each
applicable separate category of income. Enter the appropriate
code on line a (at the top of Schedule H). To determine the
appropriate code, see Categories of Income in the Instructions
for Form 1118, Foreign Tax Credit—Corporations, or the
Instructions for Form 1116, Foreign Tax Credit (Individual,
Estate, or Trust). If code 901j is entered on line a, enter on line b
the country code for the sanctioned country using the two-letter
multiple sanctioned countries, see Separate categories of
income, earlier.
Lines 12 and 13. Reserved.
Line 14. Enter the amount of disallowed taxes with respect to
foreign taxes deemed paid in connection with the 2020 tax year
share of section 965(a) inclusions from pass-through entities
(that is, the amount reported on line 9). Attach a schedule setting
forth, by U.S. shareholder pass-through entity and relevant
DFIC, the amount of deemed-paid taxes, applicable percentage,
Lines 1 and 2. Reserved.
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Instructions for Form 965 (Rev. 01-2021)
and disallowed taxes. Taxpayers or filers not required to
complete Schedule F should not complete this line. See “How
To Complete” above.
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Instructions for Form 965 (Rev. 01-2021)