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Moore Stephens Doeren Mayhew Blog

Final Regulations on Transition Tax (Sec. 965) Immediate Action May be Required!

Even though the IRS is shut down as part of the current US government shut down, Treasury has issued final regulations on the Transition Tax (even though the document did not have a TD number because of the shut down!). Probably the most important issue relates to a new due date (January 31, 2019) for certain elections or filings that should have been previously filed (often within 30 days of a triggering or acceleration event).

S Corporation shareholders who elected to defer their Transition Tax and then had a triggering event may want to elect to pay the liability over an 8-year period. However, if it was a triggering event that involved the liquidation, sale, exchange or other disposition of substantially all of the assets of the S Corporation, a cessation of the S Corporation business or the S corporation ceased to exist, they only had 30 days to make this election under the proposed regulations. If this was not done timely (or has not yet been filed), you have until January 31, 2019 to complete the procedures. This extension also applies to transfer agreements where the liability for the Transition Tax is to be transferred to the purchaser of the S Corporation.

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