Final regulations released to Federal Register, 'transition tax' under section 965

The U.S. Treasury Department and IRS today released for publication in the Federal Register final regulations (T.D. 9846) relating to the “transition tax” under section 965 as added to the Code by the U.S. tax law enacted in December 2017 (Pub. L. No. 115-97 also known as the “Tax Cuts and Jobs Act”).

Read text of the final regulations [PDF 556 KB] (78 pages but originally 306 pages when released to the Federal Register) under section 965. 

Advance versions of final regulations

The IRS and Treasury previously released a version of these final regulations on January 15, 2019, (during the partial government shutdown). That version of the regulations was posted on the IRS website and included the following statement:

This document will be submitted to the Office of the Federal Register (OFR) for publication. The version of the final rule released today may vary slightly from the published document if minor editorial changes are made during the OFR review process. The document published in the Federal Register will be the official document.

Subsequently, the IRS and Treasury made changes to that advance version of the final regulations. The new version of the final regulations included changes that delay the effective date for the section 965(h) election relating to “transfer agreements” until 30 days after the date when the final regulations are published in the Federal Register (rather than on January 31, 2019, as originally set forth in the January 15, 2019 version of the final regulations)—that is, 30 days after February 5, 2019.

This change means that taxpayers considering or in the process of filing transfer agreements have at least an additional month of time. Refer to pages 94-95 and 267 of the replacement version regulations [PDF 1 MB] on the IRS website. Read TaxNewsFlash

Read a computer-generated document [PDF 838 MB] (an unofficial document produced by KPMG) that compares the 306-page version of the final regulations as submitted today to the Federal Register for publication against the 305-page version of the final regulations that was ultimately updated by the IRS and Treasury in late January 2019. This document is intended to show what changes, if any, have been made to the final regulations prior to publication in the Federal Register. It has not been reviewed for accuracy.

Legend: Omitted text is shown as stricken, new text is indicated by the blue highlight, and replaced text is highlighted in orange.

KPMG report on the final regulations

KPMG previously provided a report containing analysis and observations about the final regulations under section 965 (based on the version of the regulations released by the IRS and Treasury on January 15, 2019). Read TaxNewsFlash

The information contained in TaxNewsFlash is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230, as the content of this document is issued for general informational purposes only, is intended to enhance the reader’s knowledge on the matters addressed therein, and is not intended to be applied to any specific reader’s particular set of facts. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Applicability of the information to specific situations should be determined through consultation with your tax adviser.
 

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