Update on 965 Regulations: Act now for January 31st Deadline 965 Regulation Update Act Now
By Raymond Wynman, and Andrew Wai
In light of the release of final 965 regs, we wanted to promptly bring the following item to your attention:
965 transfer agreements due Jan 31 — The IRS has imposed a deadline of January 31, 2019 for the timely filing of 965 acceleration event transfer agreements for acceleration events occurring on or before December 31, 2018 (§1.965-7(b)(3)(iii)(B)(2)(ii)). In the absence of a timely filed transfer statement, a 965 acceleration event will accelerate payment of any outstanding 965 liability of the transferrer.
Acceleration events include:
- The liquidation, sale, exchange, or other disposition of substantially all assets of a person
- A consolidated group ceasing to exist (including by reason of the acquisition of a consolidated group or the group otherwise discontinuing in the filing of a consolidated return.
The IRS intends that exchange or disposition of assets is meant to include tax-free reorganizations (including downstream reorganizations and even F reorgs!) and 351 and 721 transactions (Explanation at VII.B.1). Requirements for the contents of a transfer statement are set forth at §1.965-7(b)(3)(iii)(B)(4) and notably include a requirement to state whether the leverage ratio of the eligible section 965(h) transferee and all subsidiary members of its affiliated group immediately after the acceleration event exceeds three to one.
Reach out for help if you might have an acceleration event requiring filing of a transfer statement.
Reference the full regulations released by the IRS via online search.
Read this recent article to learn how your tax department can unlock the benefits of the TCJA,
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