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Department of the Treasury
Internal Revenue Service
Instructions for Form 965-A

(Rev. January 2021)
Individual Report of Net 965 Tax Liability

Section references are to the Internal Revenue Code unless Certain taxpayers may make certain elections with respect to
otherwise noted. section 965. Relevant to this form, these elections include: (i) an
election to pay a net 965 tax liability over 8 years, and (ii) an
election by S corporation shareholders to defer payment of a net
Future Developments 965 tax liability with respect to an S corporation until a triggering
For the latest information about developments related to Form event. In the case of the deferral election by S corporation
965-A and its instructions, such as legislation enacted after they shareholders, the deferred amounts are subject to annual
were published, go to IRS.gov/Form965A. reporting requirements, and when a triggering event occurs, the
S corporation shareholder may then (subject to certain
limitations) elect to pay the amount of the net 965 tax liability that
What’s New is no longer subject to deferral over 8 years.
In Parts I, II, and III of the form, line 4 is now designated for use
for 2020 reporting.
Changes to the carryback of net operating losses. The General Instructions
Coronavirus Aid, Relief, and Economic Security Act (CARES
Act) added section 172(b)(1)(D)(i), which provides for a Purpose of Form
carryback of any net operating loss (NOL) arising in a taxable This form should be used by individual taxpayers and entities
year beginning after December 31, 2017, and before January 1, taxed like individuals (for example, certain trusts and estates).
2021, to each of the five taxable years preceding the taxable This form is used to report a taxpayer’s net 965 tax liability for
year in which the loss arises, including those years in which a each tax year in which a taxpayer must report or pay section 965
taxpayer had a section 965(a) inclusion (section 965 years). A amounts. In addition, this form is used to report the
taxpayer applying for a tentative refund resulting from the determination of a taxpayer’s net 965 tax liability, whether or not
carryback of an NOL to a section 965 year must include with the to be paid in installments; the payments of a net 965 tax liability
Form 1045 an amended Form 965-A to record the amount of the to be paid in installments; adjustments of any net 965 tax
change in the section 965 net tax liability, if any, caused by the liabilities outstanding, including any net 965 tax liability of the
NOL carryback, and a statement of explanation to explain the taxpayer that has been assumed by another taxpayer or any net
change in the section 965 net tax liability. See Rev. Proc. 965 tax liability that the taxpayer has assumed; an S corporation
2020-24, 2020-18 I.R.B. 750, and Frequently asked questions shareholder’s net 965 tax liability with respect to an S
about carrybacks of NOLs for taxpayers who have had Section corporation, whether or not to be deferred; and the beginning
965 inclusions for additional information regarding the balance of, adjustments to, and ending balance of any deferred
consequences of carrying back an NOL to a section 965 year, net 965 tax liabilities with respect to an S corporation. In
including limitations on refunds for taxpayers that carry back summary, this form is intended to be a cumulative report of a
NOLs to section 965 years. taxpayer’s net 965 tax liabilities through payment in full. This
form must be completed by a taxpayer for every tax year for
Reminders which the taxpayer has any net 965 tax liability outstanding and
The IRS has developed the following forms: not fully paid at any point during the tax year, including deferred
• Form 965-C, Transfer Agreement Under Section 965(h)(3). net 965 tax liabilities with respect to an S corporation.
• Form 965-D, Transfer Agreement Under Section 965(i)(2).
• Form 965-E, Consent Agreement Under Section 965(i)(4)(D). Definitions
Deferred foreign income corporation (DFIC). A DFIC is, with
The instructions for these forms contain information that may respect to any U.S. shareholder, any specified foreign
be useful to filers of Form 965-A. As such, references to these corporation (as defined under section 965(e)) of a U.S.
instructions have been added throughout the instructions for shareholder that has accumulated post-1986 deferred foreign
Form 965-A. income (as defined under section 965(d)(2)) as of November 2,
Background 2017, or December 31, 2017, that is greater than zero.
On December 22, 2017, section 965 of the Code was amended. U.S. shareholder. For tax years of foreign corporations
As a result of the amendment, certain taxpayers are required to beginning before January 1, 2018, a U.S. shareholder is a U.S.
include in income an amount (a section 965(a) inclusion amount) person who owns (directly, indirectly, or constructively) 10% or
based on the accumulated post-1986 deferred foreign income of more of the total combined voting power of all classes of stock of
certain foreign corporations (specified foreign corporations) that a foreign corporation. A U.S. person for this purpose is defined
are deferred foreign income corporations (DFICs) that they own in section 957(c) of the Code.
either directly or indirectly through other entities. Other taxpayers Net income tax liability. The taxpayer’s regular income tax
may have inclusions in income under section 951(a) by reason liability reduced by the credits allowed under subparts A, B, and
of section 965 due to ownership of DFICs through domestic D of part IV of subchapter A (generally non-refundable credits;
pass-through entities that are U.S. shareholders of the DFICs. specifically, those credits allowed under sections 21 through
When referring to both amounts in the preceding two sentences, 30D and sections 38 through 45T).
these instructions use the term “section 965(a) inclusion.”
Section 965 also allows for a deduction (section 965(c) Net 965 tax liability. The excess of the taxpayer’s net income
deduction). Section 965(a) inclusions and corresponding section tax liability computed with all section 965 amounts included
965(c) deductions are taken into account based on the last tax (“with calculation”) over the taxpayer’s net income tax liability
year of the DFIC that begins before January 1, 2018. without regard to section 965 (“without calculation”). See

Dec 15, 2020 Cat. No. 71280E

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Regulations section 1.965-7(g)(10) for rules for computing the             for Form 965-C for more details.) If this occurs, the transferee 
net 965 tax liability.                                                     should complete one of lines 5 through 8 in Part I as follows:
S corporation-related net 965 tax liability.  With respect to an           • In column (a), enter the tax year of the net 965 tax liability for 
                                                                           which the installment payment liability is being assumed. For 
S corporation, the excess of the taxpayer’s net income tax 
                                                                           example, if a net 965 tax liability incurred in tax year 2017 (with 
liability computed with all section 965 amounts included (which, 
                                                                           respect to which an installment payment election was made) 
in this case, includes only section 965 amounts allocated from 
                                                                           was transferred to a transferee in 2022, in 2022 the taxpayer 
such S corporation with respect to DFICs of which such S 
                                                                           (transferee) reports “2017” in column (a).
corporation is a U.S. shareholder) (“with calculation”) over the 
taxpayer’s net income tax liability without regard to section 965          • Skip columns (b) through (i).
(“without calculation”).                                                   • In column (j), report, as a positive number, the remaining 
                                                                           installment payment liability (that is, original liability less 
Reporting year.    The tax year of the return with which this form         payments made by the transferor) assumed by the taxpayer as 
is being filed.                                                            transferee.
                                                                           • In column (k), report the tax identification number of the 
Who Must File                                                              transferor.
Any individual taxpayer (or taxpayer taxed like an individual) who         • Payments of such liability would then be reported on the 
has a net 965 tax liability for any tax year or has any net 965 tax        corresponding line of Part II in the same manner as if the 
liability remaining unpaid at any time during a tax year must file         taxpayer were the transferor.
this form.                                                                   For example, assume Transferor had an original net 965 tax 
                                                                           liability of $100 in year 1, when an installment payment election 
When and Where To File                                                     was made. In years 1 through 5, Transferor reports payments of 
File Form 965-A with the income tax return of the taxpayer for             five 8% installments. Then, in year 6, the liability to pay the 
the reporting year by the due date (taking into account                    remaining installments (15%, 20%, and 25%) totaling $60 is 
extensions, if any) of the return.                                         transferred to Taxpayer as transferee. Taxpayer would report on 
                                                                           a line in Part I the tax year of the net 965 tax liability for which the 
Electronic Filing of Form 965-A                                            installment payment liability is being assumed in column (a); the 
If you file your income tax return electronically, Form 965-A is           $60 amount of the transfer as a positive number in column (j); 
filed with the electronic income tax return. See the instructions          and the tax identification number of Transferor in column (k). In 
for your income tax return for general information about                   addition, on the corresponding line in Part II, Taxpayer would 
electronic filing.                                                         report the $15 installment payment made in column (g), Paid for 
                                                                           Year 6 (the installment year as if Taxpayer were paying as 
                                                                           Transferor). In the next reporting year, Taxpayer would report all 
Specific Instructions                                                      the same information in Part II, plus the payment of $20 (20% of 
                                                                           the original $100 liability) in column (h), Paid for Year 7. In the 
Amended Report                                                             following reporting year, Taxpayer would report all the same 
Check the amended report box at the top of page 1 of the form if           information as in year 7, plus the final payment of $25 (25% of 
Form 965-A is filed with an amended return that is filed to                the original $100 liability) in column (i), Paid for Year 8.
change any reporting related to section 965, regardless of                 • Triggered deferred S corporation-related net 965 tax 
whether a Form 965-A has previously been filed. The amended                liability. Deferred S corporation-related net 965 tax liabilities 
return box must also be checked for any amended Form 965-A                 become subject to payment when a triggering event occurs. 
filed with a Form 1045 applying for a tentative refund resulting           (See instructions for Part III and Part IV for information 
from the carryback of an NOL to a section 965 year pursuant to             concerning the computation, reporting, deferral election, and 
section 172(b)(1)(D)(i).                                                   triggering events for S corporation-related net 965 tax liabilities.) 
                                                                           When such a deferred liability is triggered, it must be transferred 
Part I – Report of Net 965 Tax Liability                                   from Part IV, where it is annually reported, to Part I, column (f). 
                                                                           Such a triggered S corporation-related net 965 tax liability is 
and Election to Pay in Installments                                        generally eligible for an election to be paid in 8 installments 
                                                                           beginning in the year of the triggering event. In the case of a 
Lines 1 through 8.     Report in Part I net 965 tax liability amounts      triggering event with respect to a deferred S corporation-related 
as follows.                                                                net 965 tax liability, complete one of lines 5 through 8 as follows: 
  On lines 1, 2 and 3, you must continue to report 2017, 2018,             In column (a), report the tax year in which the triggering event 
and/or 2019 amounts for all columns, including the original                occurred. Skip columns (b) through (e) and report the triggered 
computation of net 965 tax liability reported in columns (b)               liability in column (f). Report in column (g) whether the taxpayer 
through (i) on a prior-year Form 965-A. Report in column (j) any           elected to pay the triggered liability in 8 installments by entering 
current-year net 965 tax liability transferred out (that is, for which     “Yes” or “No.”
you filed a valid transfer agreement as the transferor) or any 
current tax year subsequent adjustments. Also, complete                            For certain triggered net 965 tax liabilities, the taxpayer 
column (k), if applicable.                                                   !     may elect to pay in installments only with consent of the 
                                                                           CAUTION Secretary. (See instructions for Form 965-E for more 
  For 2020 tax years, use line 4 to report section 965(a)                  details.) Without consent, the taxpayer must enter a checkmark 
inclusions derived solely through interests in pass-through                in the “No” column of column (g) and enter the amount of the 
entities that are U.S. shareholders of DFICs.                              triggered liability in column (h).
  Use lines 5 through 8 to report other amounts of net 965 tax               If the taxpayer does not (or cannot) elect to pay the triggered 
liability of the taxpayer, such as:                                        •
                                                                           deferred net 965 tax liability in installments, then report the 
• Installment liability transfers in. The taxpayer may, in                 amount from column (f) in column (h). This should equal the 
certain circumstances, and by agreement with the Secretary,                payment reported in the corresponding line of Part II, column (b), 
assume as transferee the installment payment liability for the             Paid for Year 1.
transferor's remaining net 965 tax liability and pay it in the same          If the taxpayer elects to pay the triggered liability in 
manner as if the taxpayer were the transferor. (See instructions           •
                                                                           installments, skip column (h) and report the amount from column 

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(f) in column (i). The corresponding line in Part II, column (b), liability net of payments previously made, to a transferee in
Paid for Year 1, should report an 8% payment of the amount 2022, the taxpayer (transferor) would report, on line 1, column
elected to be paid in installments. The remaining payments (j), as a negative number, the amount of the net liability
should generally be reported in subsequent reporting years transferred out. The making and reporting of payments on such
according to the installment schedule. (See instructions for Part liability should generally cease (see instructions for Part II, later).
II, line 1, for the general installment schedule.) • Report any transfer in of a net 965 tax installment payment
• If lines 5 through 8 do not provide adequate lines to report all liability from a seller/transferor by a transferee (see the
the taxpayer’s transactions described above, an additional Form instructions for Lines 1 through 8, earlier).
965-A should be used. • Report subsequent adjustments to the net 965 tax liability for
the tax year reported in column (a) for which no amended return
Note. Even if a net 965 tax liability was reported on a taxpayer’s was required to be filed, such as an audit adjustment. A liability
income tax return and fully paid, because no elections were increase should be reported as a positive number and a
made, the taxpayer must complete the appropriate line in Part I decrease as a negative number.
and report the related payment on the corresponding line in Part
II, column (b). Note. An adjustment of a net 965 tax liability elected to be paid
in installments is generally prorated to all installments.
Note. If an installment election under section 965(h) or a For example, for tax year 2017, a taxpayer (TP) reported a
deferral election under section 965(i) was made, then the $100 net 965 tax liability for which an installment election was
taxpayer must complete the appropriate line in Part I, as well as made. For each of years 1 through 5, TP pays and reports an $8
the corresponding line in Parts II through IV, as applicable, to installment. Also, in year 5, an audit adjustment increases the
report the status of the net 965 tax liability and any related 2017 net 965 tax liability to $150, a $50 positive adjustment. No
adjustments for the reporting year. amended return was required and there was no negligence,
Column (b). Report the taxpayer’s net income tax liability for intentional disregard, or fraud on the part of TP. This adjustment
the tax year reported in column (a), with all section 965 amounts would be prorated to all the installments. TP would report the
included (“with calculation”). $50 adjustment in Part I, line 1, column (j), as a positive number,
so the reported adjusted liability would be $150. In addition, TP
Column (c). Report the taxpayer’s net income tax liability for would pay and report (in addition to the original $8 installment
the tax year reported in column (a), without regard to section 965 reported for year 5) $20 on Part II, line 1, column (f),
(“without calculation”). representing 8% of the adjustment prorated to each of years 1
Column (d). Report the excess of the taxpayer’s “with through 5, for which the installment due date had already
calculation” reported in column (b) over the “without calculation” arrived. For year 6, TP would pay and report $22.50 (15% of the
reported in column (c). This is the taxpayer’s net 965 tax liability adjusted $150 liability); for year 7, $30 (20% of the adjusted
for the tax year reported in column (a). $150 liability); and for year 8, $37.50 (25% of the adjusted $150
liability).
Column (e). If the taxpayer is a shareholder in one or more S
corporation(s) with section 965 amounts, report the total of In a case in which a net 965 tax liability for a tax year is both
column (g) from Part III for the tax year reported in column (a). adjusted and transferred, report the net adjustment/transfer
This is the total S corporation-related net 965 tax liability the number in column (j), a transferee tax identification number in
taxpayer elected to defer. See detailed instructions for Part III column (k), and provide a statement, attached to this form, which
regarding the S corporation-by-S corporation calculations and includes details of the amounts netted in column (j).
elections.
Part II – Record of Amount of Net 965
Column (f). Report the amount in column (d), less the amount
in column (e), if any. This is the taxpayer’s net 965 tax liability Tax Liability Paid by the Taxpayer
eligible for the installment payment election. Part II is intended to be a cumulative record of the actual
Column (g). If the taxpayer made an election to pay a net 965 payments the taxpayer has made with respect to the net 965 tax
tax liability in installments over 8 years as provided for in section liabilities reported in Part I.
965(h) and in the manner described in Regulations section Line 1. This line records the actual payments with respect to the
1.965-7(b)(2), enter a check mark in the “Yes” column. If “Yes,” net 965 tax liability reported on line 1 of Part I for the tax year
skip column (h) and enter the amount from column (f) in column 2017.
(i). Otherwise, enter a check mark in the “No” column. If “No,” The general installment payment schedule for a net 965 tax
enter the amount from column (f) in column (h) and skip column liability subject to an election to pay in installments is:
(i).
1. 8% of the net 965 tax liability payable in year 1 (the year
The actual payment of the first installment is due no later of the section 965(a) inclusion or triggering event with respect to
! than the due date of the return for the tax year without a deferred S corporation-related net 965 tax liability),
CAUTION extension, even if the election is made on a return filed
2. 8% of the net 965 tax liability payable in year 2,
by the extended due date.
3. 8% of the net 965 tax liability payable in year 3,
Column (j). Report the following in column (j): 4. 8% of the net 965 tax liability payable in year 4,
• Report, as a negative number, any net 965 tax liability for the 5. 8% of the net 965 tax liability payable in year 5,
year reported in column (a) that has been transferred out to a
transferee, by agreement with the Secretary, under which the 6. 15% of the net 965 tax liability payable in year 6,
transferee becomes liable for the remaining installments due on 7. 20% of the net 965 tax liability payable in year 7, and
the liability in the same manner as if such transferee were the 8. 25% of the net 965 tax liability payable in year 8.
taxpayer. (See instructions for Form 965-C for more details.) In
addition, provide the tax identification number of the transferee If, for any reason, the actual payment differs from the
in column (k). For example, if the taxpayer (transferor) incurred a schedule, report the actual payment made.
net 965 tax liability in tax year 2017, for which an installment Example. If the reporting year is 2020 and the taxpayer is
payment election was made, then properly transferred the reporting a 2017 net 965 tax liability for which an installment

Instructions for Form 965-A (Rev. 01-2021) -3-

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payment election was made, because the 2020 reporting year is amount reported on the corresponding line in Part I, column (j),
“Year 4” with respect to a 2017 net 965 tax liability being paid in less any payments reported in Part II, columns (b) through (i).
installments, installment payments reported in Part II on line 1,
Column (k). For each line, report only the payment made (if
the line for 2017, should generally be:
any) for the reporting year.
• In column (b), Paid for Year 1, report 8% of the 2017 net 965
tax liability; Current-year reporting of column (k) amounts:
• In column (c), Paid for Year 2, report 8% of the 2017 net 965 Individuals: For tax year 2020, enter the amount from Form
tax liability; 965-A, Part II, column (k), line 4, on Schedule 2 (Form 1040),
• In column (d), Paid for Year 3, report 8% of the 2017 net 965 line 9.
tax liability; and All others: For all other filers (that is, other taxpayers taxed like
• In column (e), Paid for Year 4, report 8% of the 2017 net 965 an individual), follow the form instructions for that other
tax liability. applicable return.

Column (a). Report the tax year of the section 965(a) inclusion, Part III – S Corporation Shareholder:
the net 965 tax liability for which an installment payment liability
is being assumed, or triggering event with respect to a deferred Report of Calculation of Net 965 Tax
S corporation-related net 965 tax liability, as reported on the Liability Related to 965 Amounts
corresponding line of Part I, column (a).
Allocated from an S Corporation and
Columns (b) through (i). These columns are used to record
the taxpayer’s cumulative payments, made each reporting year, Election To Defer Such Net 965 Tax
for the net 965 tax liability reported on the corresponding line in
Part I. Liability
If no installment election is made, the net 965 tax liability This Part allows a taxpayer that is an S corporation shareholder
reported in Part I, column (h), should be paid and reported on to report net 965 tax liabilities related to section 965 amounts
the corresponding line of Part II, column (b), Paid for Year 1, and with respect to S corporations. For each S corporation-related
the remaining payment columns (c) through (i) left blank. net 965 tax liability, the taxpayer may elect to defer payment of
such liability until a triggering event occurs. (See instructions for
If an installment election is made, and no transfers, Part IV for more information on triggering events.) Each S
acceleration events, or adjustments occur during the 8-year corporation-related net 965 tax liability is calculated on an
installment period, then 8% of the net 965 tax liability should be individual S corporation basis, and an election to defer such
paid and reported in column (b), Paid for Year 1 (the year of the liability is also made on an individual S corporation basis. Such
installment payment election). In the next reporting year, the liabilities deferred, if any, must be totaled by tax year, and the
relevant information from the prior reporting year should be total carried to Part I, column (e), of the respective tax year line.
carried forward, plus 8% of the net 965 tax liability should be
paid and reported in column (c), Paid for Year 2. In future Lines 1 through 4. Report S corporation-related net 965 tax
reporting years, the payments and payment reporting should liabilities for the tax year indicated. On lines 1, 2 and 3, you must
continue similarly in accordance with the general installment continue to report 2017, 2018, and/or 2019 amounts for all
payment schedule described above. columns, even though they were reported on a prior-year Form
965-A. Space is provided for reporting net 965 tax liabilities
If the taxpayer transfers out a net 965 tax liability, then the
related to up to four S corporations. If additional lines are needed
making and reporting of installment payments should generally
for the tax year, use additional Forms 965-A.
cease for the transferred net 965 tax liability in the year of
transfer. However, reporting with respect to the net 965 tax Column (a). Report the name of the S corporation from which
liability is still required for the reporting year if any net 965 tax the taxpayer is allocated section 965 amounts. Abbreviate as
liability of the taxpayer remains unpaid at any time during the needed.
reporting year. Column (b). Report the tax identification number of the S
If an acceleration event occurs, then the unpaid portion of all corporation reported in column (a). The tax identification number
remaining installments is due on the date of the acceleration of an S corporation is its employer identification number (EIN).
event and should be paid and reported in the column for the year
in which the acceleration event occurs; however, reporting with Column (c). Report the taxpayer’s net income tax for the tax
respect to the net 965 tax liability is still required for the reporting year calculated only with section 965 amounts allocated from
year if any net 965 tax liability of the taxpayer remains unpaid at this S corporation with respect to DFICs of which the S
any time during the reporting year. corporation is a U.S. shareholder. This is the S
corporation-related “with calculation.”
If an adjustment occurs to a net 965 tax liability for which an
installment election has been made, including on an amended Column (d). Report the taxpayer’s net income tax for the tax
return, the adjustment should generally be prorated over all the year calculated without regard to section 965, that is, the
installment payments. For the part of the adjustment prorated to “without calculation.” This should equal the taxpayer’s net tax
installments whose payment date has already arrived, adjust the liability without section 965 amounts for the corresponding tax
payment for the reporting year in which the adjustment is made year reported in Part I, column (c).
and report accordingly. For the part of the adjustment prorated to Column (e). Report the excess of the taxpayer’s S
installments for which the payment date has not yet arrived, pay corporation-related “with calculation” reported in column (c) over
and report in accordance with the installment schedule. the “without calculation” reported in column (d). This is the
Payments should include both actual installment payments taxpayer’s S corporation-related net 965 tax liability with respect
made and excess payments of other income tax liabilities to this S corporation for the tax year.
applied to the taxpayer’s net 965 tax liability.
Column (f). If the taxpayer made an election to defer payment
Column (j). Report the net 965 tax liability remaining unpaid of this S corporation-related net 965 tax liability as provided for in
after the payment for the reporting year. This amount should section 965(i) and in the manner described in Regulations
equal the amount reported on the corresponding line in Part I, section 1.965-7(c)(2), enter a check mark in the “Yes” column.
column (f), or column (i), as applicable, plus or minus any Otherwise, enter a check mark in the "No" column.

-4- Instructions for Form 965-A (Rev. 01-2021)

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Column (g). If the taxpayer elected to defer an S Column (f). Report the amount of each deferred S
corporation-related net 965 tax liability, enter the amount from corporation-related net 965 tax liability, payment of which
column (e). (If the election was not made, then the liability ceases to be deferred as a result of a triggering event during the
remains a part of the taxpayer’s total net 965 tax liability subject reporting year (“triggered S corporation-related net 965 tax
to an installment payment election.) The total of column (g) for a liability”). The triggered S corporation-related net 965 tax liability
tax year represents the taxpayer’s total deferred S amount should be reported in column (f) as a negative number
corporation-related net 965 tax liability for the tax year and and transferred to column (f) on one of lines 5 through 8 in Part I
should be entered on the corresponding tax year line in Part I, as a positive number. See Triggered deferred S
column (e). corporation-related net 965 tax liability, in the instructions for
Part I, lines 1 through 8, earlier.
Part IV – Annual Report of Deferred
Column (g). Report the amount of deferred S
Net 965 Tax Liability Related to 965 corporation-related net 965 tax liability transferred out or in.
Amounts Allocated from S Transfers (out). When a taxpayer transfers stock of an S
corporation with respect to which the taxpayer has made an
Corporations election to defer payment of its S corporation-related net 965 tax
Any shareholder of an S corporation that makes an election to liability, the transfer is not treated as a triggering event if the
defer payment of an S corporation-related net 965 tax liability transferee, by agreement with the Secretary, becomes liable for
must report such liability with their income tax return for the year the deferred S corporation-related net 965 tax liability in the
of election and every year thereafter through the year in which same manner as the transferor. (See instructions for Form 965-D
such amount is fully paid. Part IV provides for the required for more details.)
annual reporting of deferred S corporation-related net 965 tax Report the amount of the transfer out as a negative number in
liabilities and any adjustments related to such deferred liabilities column (g) of the same line as the taxpayer reported the
during the reporting year. deferred S corporation-related net 965 tax liability at the
If the taxpayer fails to report for any year information beginning of the reporting year.
In a case of multiple transferees, report the total deferred S
! required to be reported under section 965(i)(7) by the
CAUTION due date of the return for such year, 5% of the deferred corporation-related net 965 tax liability transferred as a negative
net 965 tax liability shall be assessed as an addition to tax for number in column (g) and in column (h) report the tax
such reporting year. identification number of a transferee and attach a schedule to
Form 965-A providing a breakdown of the total deferred S
Column (a). Report the year of: corporation-related net 965 tax liability transferred and the
• Deferral election. In a year for which an election is made to associated tax identification numbers of each transferee.
defer an S corporation-related net 965 tax liability, any amounts Transfers in. A taxpayer may assume, by agreement with the
elected to be deferred must be transferred from Part III, column Secretary, a deferred 965 net tax liability as a buyer/transferee of
(g), to the corresponding line in Part IV, column (d). Enter the S corporation stock with respect to which the transferor has a
year for which the election is made in column (a) of the deferred S corporation-related net 965 tax liability. The taxpayer
corresponding line. will then be liable for the deferred S corporation-related net 965
• Transfer in. In certain circumstances, by agreement with the tax liability in the same manner as the transferee, including being
Secretary, a taxpayer may assume a deferred S subject to annual reporting requirements, beginning for the tax
corporation-related net 965 tax liability from another taxpayer year of transfer. (See instructions for Form 965-D for more
who had elected to defer such amount. The transferee is liable details.) For the year of transfer, a new line in Part IV must be
for the deferred S corporation-related net 965 tax liability in the completed, skipping columns (d), (e), and (f), and entering in
same manner as the transferor, including being subject to both columns (g) and (i) the deferred S corporation-related net
annual reporting requirements. (See instructions for Form 965-D 965 tax liability transferred in as a positive number.
for more details.) Enter the tax year of transfer in column (a). See
the instructions for Part IV, column (g), later, for reporting the For reporting years following the year of transfer, report the
amount of the transfer in. transferred deferred S corporation-related net 965 tax liability in
the same fashion as all other deferred S corporation-related net
Column (b). Report the name of the S corporation to which the 965 tax liabilities.
deferred net 965 tax liability relates. Abbreviate as needed.
Column (h). Provide the tax identification number of the
Column (c). Report the tax identification number of the S transferee or transferor.
corporation reported in column (b). The tax identification number
of an S corporation is its employer identification number (EIN). Column (i). For each line, combine the amounts reported in
columns (d) through (g).
Column (d). Report the beginning deferred S
corporation-related net 965 tax liability.
• For the year of the deferral election, this amount will be the S Paperwork Reduction Act Notice
corporation-related net 965 tax liability for which the taxpayer We ask for the information on this form to carry out the Internal
elects to defer payment and should be transferred from the Revenue laws of the United States. You are required to give us
corresponding line for such S corporation in Part III, column (g). the information. We need it to ensure that you are complying
• For subsequent reporting years, the amount reported should with these laws and to allow us to figure and collect the right
equal the amount on the corresponding line in column (i) from amount of tax.
Part IV of Form 965-A for the prior reporting year.
• For assumptions of deferred S corporation-related net 965 tax You are not required to provide the information requested on
liabilities, by agreement with the Secretary, the amount reported a form that is subject to the Paperwork Reduction Act unless the
should equal the amount of S corporation-related net 965 tax form displays a valid OMB control number. Books or records
liability assumed by the taxpayer. relating to a form or its instructions must be retained as long as
their contents may become material in the administration of any
Column (e). Reserved for future use. Internal Revenue law. Generally, tax returns and return
information are confidential, as required by section 6103.
Instructions for Form 965-A (Rev. 01-2021) -5-

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The time needed to complete and file this form will vary            control number 1545-0074 and is included in the estimates 
depending on individual circumstances. The estimated burden         shown in the instructions for their individual income tax return.
for individual taxpayers filing this form is approved under OMB 

                                                                -6- Instructions for Form 965-A (Rev. 01-2021)

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