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The Final Regulations incorporate with modifications the rules described in the proposed regulations under Section 965 and set forth additional guidance on a range of issues relating to the implementation of that provision. Significant divergences from the rules in the Proposed Regulations include provisions for the basis adjustment elections, modifications to cash position determinations, and revisions to the five-step ordering rule for E&P adjustments (including the interaction of the ordering rule with foreign tax
credits and disregarded payment rules). The Final Regulations also clarify the timing and manners of certain Section 965 elections and payments.

Taxpayers subject to Section 965 should immediately review the Final Regulations and determine the impact, if any, on their toll tax liability. Note that the Final Regulations update the transition rules relating to transfer agreements to provide that for acceleration events that occur on or before December 31, 2018, a transfer agreement must be filed by January 31, 2019.

Read some of the key highlights we have identified thus far.


In addition, we discussed the Final Regulations on a January 23 webcast, ‘Tax reform readiness: Finally final. The section 965 regulations.’