IRS Form 965-B – In the complex world of U.S. tax compliance, IRS Form 965-B plays a crucial role for corporations and Real Estate Investment Trusts (REITs) dealing with Section 965 tax liabilities. This form helps taxpayers report and track their net tax obligations stemming from the transition tax on foreign earnings introduced by the Tax Cuts and Jobs Act of 2017. Whether you’re a corporate taxpayer managing installment payments or a REIT electing to spread out inclusions over time, understanding Form 965-B is essential for accurate reporting and avoiding penalties. In this SEO-optimized guide, we’ll break down everything you need to know about IRS Form 965-B, including its purpose, filing requirements, and step-by-step instructions.
What Is IRS Form 965-B?
IRS Form 965-B, officially titled “Corporate and Real Estate Investment Trust (REIT) Report of Net 965 Tax Liability and Electing REIT Report of 965 Amounts,” is a specialized tax form used to document and manage tax liabilities under Section 965 of the Internal Revenue Code. This section imposes a one-time transition tax on untaxed foreign earnings of certain foreign corporations owned by U.S. shareholders.
The form serves as a cumulative record, tracking net 965 tax liabilities from their initial determination through full payment. It accounts for payments, adjustments, transfers, and elections to pay in installments. For REITs, it also reports Section 965 amounts (inclusions and deductions) that are elected to be recognized over an 8-year period under Section 965(m).
Key features of the form include:
- Part I: Reports the net 965 tax liability and any election to pay in installments.
- Part II: Tracks the amount of liability paid over time.
- Part III: Specific to electing REITs, detailing amounts accounted for over multiple years.
This form ensures transparency and ongoing compliance for taxpayers with ongoing Section 965 obligations.
Who Must File Form 965-B?
Not every taxpayer needs to file Form 965-B—it’s targeted at specific entities:
- Corporate Taxpayers: Any corporation with a net 965 tax liability in a given tax year, or any unpaid liability from prior years, must file.
- REITs: Real Estate Investment Trusts that elect to account for Section 965 amounts over time are required to complete and file the form, particularly Part III.
If you’re a U.S. shareholder of a deferred foreign income corporation (DFIC)—defined as a specified foreign corporation with accumulated post-1986 deferred foreign income greater than zero as of certain 2017 dates—you may fall under these rules. Always consult the IRS definitions to confirm eligibility.
Purpose of Form 965-B and Key Definitions
The primary purpose of Form 965-B is to report a taxpayer’s net 965 tax liability for each relevant tax year, whether paid in full or in installments. It acts as an ongoing ledger until all liabilities are settled or fully accounted for.
Important definitions to know:
- Net 965 Tax Liability: The difference between your net income tax liability including all Section 965 amounts and the liability without them.
- Deferred Foreign Income Corporation (DFIC): A foreign corporation with untaxed accumulated earnings.
- Section 965(a) Inclusion: The amount of foreign earnings deemed included in income.
- Section 965(c) Deduction: A deduction that reduces the effective tax rate on the inclusion.
For REITs, the form facilitates reporting of amounts spread over 8 years: 8% in years 1-5, 15% in year 6, 20% in year 7, and 25% in year 8.
Step-by-Step Guide to Filling Out Form 965-B
Filling out Form 965-B requires careful attention to detail. Here’s a breakdown of each part based on official IRS instructions.
Part I: Report of Net 965 Tax Liability and Election To Pay in Installments
This section calculates and reports your liability:
- Enter the year of the Section 965 inclusion in column (a).
- Compute your net tax liability with (column b) and without (column c) Section 965 amounts.
- The difference goes in column (d).
- Elect installments in column (e) if applicable—REITs cannot elect this for amounts under the 8-year spread.
- Adjust for transfers or changes in column (h).
Part II: Record of Amount of Net 965 Tax Liability Paid by the Taxpayer
Track payments cumulatively:
- Report payments for each year in columns (b) through (i).
- Calculate remaining unpaid liability in column (j).
- Note the payment for the current reporting year in column (k), which ties into your main tax return (e.g., Form 1120, Schedule J).
Tip: If you’ve made an installment election, payments follow the 8-8-8-8-8-15-20-25% schedule.
Part III: Electing REIT Report of Section 965 Amounts Accounted for Over Time
Exclusive to REITs:
- Report total elected amounts in column (b).
- Break down portions accounted for each year in columns (c) through (j).
- Track remaining amounts in column (k) and current-year portions in (l).
Cautions: Acceleration events like liquidation can require immediate recognition of remaining amounts. Always report prior years’ data consistently.
If you need more lines, attach additional forms. For amended reports, check the box on page 1 and explain changes.
When and Where To File Form 965-B?
File Form 965-B with your income tax return (e.g., Form 1120 for corporations) by the due date, including extensions. Electronic filing is required if your main return is e-filed. Submit it to the IRS via the appropriate channel for your return type.
For the latest filing deadlines, check the IRS website, as they align with your corporate or REIT tax return due dates.
Related Forms and Resources
Form 965-B often works alongside:
- Form 965: Inclusion of Deferred Foreign Income.
- Form 965-A: Individual Report of Net 965 Tax Liability.
- Form 965-C: Transfer Agreement.
For more details, download the official PDF: IRS Form 965-B PDF.
Additional resources include IRS Q&A on Section 965 and regulations under Treasury Regulation Section 1.965.
Recent Updates to Form 965-B as of 2026
As of January 2026, there are no major changes reported to Form 965-B. However, always verify the latest version on the IRS website, as tax laws can evolve. The form was last reviewed on January 23, 2026.
Conclusion
Navigating IRS Form 965-B doesn’t have to be overwhelming. By understanding its role in reporting Section 965 tax liabilities, corporations and REITs can ensure compliance and manage their obligations effectively. If you’re unsure about your specific situation, consult a tax professional. Stay updated with IRS guidelines to avoid issues, and remember to file accurately and on time. For the downloadable form, visit https://www.irs.gov/pub/irs-pdf/f965b.pdf.