Industry Directive #1 on Section 965 Foreign Earnings Repatriation - IDR Questions |
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IDR Questions for section 965
This document provides minimum information that should be requested for the review of a section 965 election. Depending on the facts and circumstances, additional information may be needed.
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Provide a copy of the Domestic Reinvestment Plan (DRP); the date that the DRP was approved by the appropriate corporate official; the date the DRP was ratified by the Board of Directors (or other appropriate body); and the date the first dividend was repatriated.
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Provide documentation to establish the amount used as the maximum qualified dividend from the applicable financial statement if greater than $500 million. Were any adjustments made to the amount reflected? If so, provide an explanation of the adjustments made along with documentation to support the amount.
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Provide documentation to establish the amount of base period dividends. Unlike the election year cash dividends, base period dividends include cash and non-cash distributions, section 956 inclusions and distributions of Previously Taxed Income. Were any adjustments made to any base period year? If so, provide an explanation of the adjustments made along with documentation to support the amount.
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Provide the following information and documentation with regard to each qualifying dividend:
a. The date the dividend was paid;
b. The name(s) of the entity(ies) that paid the dividend;
c. The country(ies) from which the dividends were paid;
d. The name(s) of the entity(ies) that received the dividend;
e. The amount of the qualifying dividend;
f. Verification that the dividend qualifies as a cash dividend; and
g. Documentation to support each of the items listed in a through f, above.
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Provide a list of the expenses that are disallowed under section 965(d)(2) for each dividend identified above.
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Were any cash dividends determined under section 965(a)(2)? If so, please provide a list of each such dividend, the entity from which it was received, and documentation that the amount was distributed to the U.S. shareholder in the election year.
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Provide documentation to establish the beginning and ending balances in related party indebtedness accounts. If adjustments were made to either balance, provide an explanation of the adjustments along with documentation to support the amount.
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Provide documentation detailing expenditures made in the election year and each subsequent year on Principal Investments listed in the domestic reinvestment plan. Determine if the taxpayer intends to meet the Safe-harbor under Notice 2005-10. Determine that the expenditures meet all requirements for permitted expenditures found in Notice 2005-10.
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Provide documentation detailing expenditures made in the election year for Alternative Investments listed in the domestic reinvestment plan.
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Provide an explanation and documentation to show that executive compensation was not included in the expenditures made in the election year on Principal or Alternative Investments (collectively referred to as “Permitted Investments”).
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Provide an explanation and documentation to show that expenditures made in the election year on Permitted Investments do not include any compensation paid in the form of stock grants or options.
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Provide documentation showing the Foreign Tax Credit calculation, Taxable Income calculation and allowable credits (FTC and AMT).
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Page Last Reviewed or Updated: October 17, 2008