Example:

To identify the Maximum Deferral Amount in year 1, multiply the IRC 965 Total Tax amount by .92, in year 2 multiply it by .84, in year 3 multiply it by .76, in year 4 multiply it by .68, in year 5 multiply it by .60, in year 6 multiply it by .45, in year 7 multiply it by .25. The remaining 25% is due in year 8 so that maximum deferral in year 8 is zero.

Taxpayers were instructed to make a separate designated payment for their IRC Section 965 liability and/or 965(h) installment payment. CP 256 was created for this purpose. The CP 256 is a 965(h) installment reminder notice that is sent 8-10 weeks prior to the due date of the return to remind taxpayers of their 965 payment obligation. There is a payment voucher that can be utilized to send in the 965(h) installment payment. Taxpayers may also pay their 965(h) installments electronically.

These 965 designated payments should be applied to the inclusion year module and/or the triggering event year module where the Section 965 liability was assessed and remains due and should post as a TC 670 DPC 64. Once posted, BMF programming systemically generates a TC 767 CRN 263 in the amount of the payment.