Section 965 Transition Tax Resolution for a US Shareholder of a Canadian Corporation

A US cit­i­zen who owned shares in a Cana­di­an oper­at­ing com­pa­ny was deemed to have undis­trib­uted for­eign earn­ings sub­ject to the one-time IRC Sec­tion 965 tran­si­tion tax, with no pri­or plan­ning in place. We cal­cu­lat­ed the deemed repa­tri­a­tion amount, pre­pared the required Sec­tion 965 tran­si­tion state­ment and elec­tion, and struc­tured a per­mis­si­ble eight-year install­ment pay­ment plan to man­age the cash flow impact. Out­come: the tran­si­tion tax lia­bil­i­ty was report­ed cor­rect­ly and the client avoid­ed penal­ties for non­com­pli­ance.