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965 Election I need help understanding this provision in the…

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965 Election I need help...
965 Election I need help understanding this provision in the new tax act. Single member S-corporation owns a foreign entity that has made some money. 1. He is required to record all the money earned? or just what he brings back to US? 2. Can he defer paying income on this money that is in his S-corporation (as far as Federal taxes are concern) until the S-corp is dissolved, converted to a C or his death? 3. If yes, I assume he can pull the money out of the S-corp and use it just like any money in there from US activity (following basis rules, etc) 4. Do you have any easy to follow directions on this? THanks, JW
Submitted: 1 month ago.Category: Tax
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Answered in 5 hours by:
3/10/2018
Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 1 month ago
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
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Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 1 month ago
I am very familiar with the new IRC section 965. I have researched it extensively for our firm, and have written spreadsheets to calculate the dean dividend and the toll charge for both individuals and corporations.
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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 1 month ago
The new tax provisions and section 965 do not apply to S corporations.
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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 1 month ago
He can as you state defer the tax on the earnings and profits until he either brings the cash back, or dissolves or liquidates the S corporation, or terminates is S corporation election.
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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 1 month ago
For S corporations, the old section 956 still applies. Investment in US property. So if he pulls the money out from the foreign country and brings it back to the United States, even as alone, it is considered a Dean dividend and he will pay tax on the income. And the toll charge.
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Customer reply replied 1 month ago
Do you have any articles or a flow chart to track the income and how it will be taxed?
Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 1 month ago

I believe I do at the office. I will be back there on Sunday if you can wait that long.

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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 1 month ago

I also have a couple PPT pages from Deloitte and E&Y that show the calcs.

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