Form 965 (Schedule F)

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What Is Form 965

IRS Form 965, officially known as the "Inclusion of Deferred Foreign Income Upon Transition to Participation Exemption System," is used to report the transition tax on untaxed foreign earnings of foreign subsidiaries of US companies. Schedule F is an accompanying document to Form 965, which details foreign taxes deemed paid by domestic corporations and serves to calculate foreign tax credits associated with the Section 965(a) inclusion.

How To Fill Out Form 965 Instruction (Schedule F)

Note that this form is used for reporting foreign taxes paid by domestic corporations concerning foreign corporations in which the filer has a section 965(a) inclusion.

Identify the Taxpayer: Start by providing the name and identifying number of the person filing the return at the top of the form.

Categorization: In section 'a', enter the applicable separate category code. If code 901j is used, enter the country code for the sanctioned country in section 'b.'

List Deferred Foreign Income Corporations (DFIC): Enter the EIN or Reference ID number of each DFIC. Specify the U.S. tax year-end (Year/Month) and country of incorporation for each DFIC. Record the Section 965(a) inclusion amounts in U.S. dollars and functional currency.

Calculate Totals: Sum up the values from individual entries for totals in the relevant sections.

Post-1986 Undistributed Earnings and Taxes Paid: Report the post-1986 undistributed earnings in functional currency. Divide the Section 965(a) inclusion in functional currency by the post-1986 undistributed earnings, capping it at 100%. Report opening balances, foreign taxes paid, and deemed paid for the tax year, and then calculate the post-1986 foreign income taxes by adding the relevant columns.

Final Computations: Determine the taxes deemed paid by multiplying the relevant columns as instructed on the form.

Additional Schedules: Add additional schedules as needed for multiple entries. Ensure all information is accurate and complete.

How To File IRS Form 965 (Schedule F)

Form 965 and Schedule F should be attached to your main tax return form, such as Form 1040 or 1120, depending on your taxpayer type. Ensure all information is accurate and complete, as it is vital for correctly determining your transition tax liability and foreign tax credit.

Deadline For Form 965 (Schedule F)

The deadline for filing Form 965, including Schedule F, is typically the same as the deadline for the tax return with which it is filed. It is usually due on the annual tax filing deadline, which for most taxpayers is April 15 or the next business day if April 15 falls on a weekend or holiday. If you received an extension to file your tax return, Form 965 (Schedule F) should also adhere to that extended deadline.

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