Assessment statutes of limitation on the Sec. 965 Transition tax
LB&I released a memorandum (LB&I-04-1120-0020), which provides a six-year limitation period for the assessment of a net transition tax liability.
The memo clarified the following:
- The six-year period starts from the date the US shareholder’s tax return is filed reporting the Sec. 965 tax liability.
- When installment payments for Sec. 965 is elected, the six-year period starts from the original year of Sec. 965 inclusion, not the year installment payment is made.
- The three-year statute of limitation expires on the portion of the taxpayer’s income tax liability that is not covered by the Sec. 965 six-year statutes of limitation.