In March, a taxpayer filed a brief with the Ninth Circuit Court of Appeals in which it argued that the transition tax that resulted from the income inclusion required under Internal Revenue Code Section 965 (“§ 965”) is unconstitutional because the tax is not imposed on the taxpayer’s own income, as required by the 16th Amendment. If the taxpayer in the Ninth Circuit case wins, then what?

  • Would actual cash dividends of earnings previously included under § 965 lose their status as previously taxed income and become taxable?
  • What are the state-tax implications?

Speakers: Kyle O. Sollie Sebastian C. Watt

Event Type: Webinar

Start Date/Time:
27 May 2021, 2:00 PM EDT
End Date/Time:
27 May 2021, 2:30 PM EDT

Regardless of how the case is ultimately decided, there are state-tax refund opportunities related to § 965 that will expire this year for most taxpayers.

Join us on May 27 as we explore:

  • The status of the federal litigation challenging § 965
  • State refund opportunities related to § 965, including:
    • Excluding § 965 income from the state tax base (even in states that don’t purport to allow a full exclusion or dividend-received deduction)
    • Restoring NOLs diminished by the § 965 income inclusion in NY, NJ, and FL.
    • California includes 25% of any cash repatriation of earnings previously included in income under § 965 in the tax base. Can you include the sales of the dividend paying subsidiary that produced the earnings in your apportionment?
This presentation is also available on Reed Smith’s YouTube page.