15631: IRC 965 - Transition Tax Statement

Those who are required to report section 965 amounts must do so using an IRC 965 Transition Tax Statement, by completing the 965 screen. This screen available for Forms 1040, 1065, 1120, and 1120-S.

Those who may be required to report section 965 amounts:

• A person who is a U.S. shareholder of a deferred foreign income corporation (DFIC),
• A direct or indirect partner in a domestic partnership that is a U.S. shareholder of a DFIC,
• A shareholder in an S corporation that is a U.S. shareholder of a DFIC, or
• An owner or beneficiary of another domestic pass-through entity that is a U.S. shareholder of a DFIC. 

Note: In a 1040, complete the return without making entries on lines 1 through 7 of the transition statement and view the return. The amount on line 63 of Form 1040 must be entered on the line Taxpayer's net tax liability for the taxable year without 965 related amounts before any other entries are made on screen 965. 

Available elections are also shown on screen 965 below the transition tax form. These are required entries meaning that you must choose either Yes or No in the drop down for each election before leaving the screen. Specific elections vary by return type.

A section 965 election can be made on an extended return or a previously accepted return can be amended using Form 1040-X.

See the following for more information and additional requirements: 

• Publication 5292
• Section 965 FAQs
• Notice 2018-13