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On Release 2017.03050, federal was updated to add Section 965 transition statement, to update Form 1040, to add the 1040-V (Sec 965) voucher, and to reflect the 965 payment in the letters (when applicable).
Form 1040-ES is updated to not include Sec 965 tax for Release 2017.04000.
Form 2210 is updated to not include Sec 965 tax for Release 2017.04000.
Schedule A is updated to reflect the correct AGI for limitations on Release 2017.04000.
Please review the help for Section 965 and cross references for 965 and 1040 for further information. Form 1040 was updated to include Section 965 income on line 21, to reduce tax by any 965(i) on line 44 and show future installments on line 73.
States are not updated for Release 2017.03050. Clients will be notified by software news when changes are made.
Form 1116 is not going to be automatically updated since there is no way to tie the 965 to a specific income category. This may change in the future based on customer feedback. Currently, diagnostic 36427 issues to tell the user to make manual adjustments on the credit for taxes paid form when an entry has been made on Section 965 transition statement, line 4a/line 4b.
Section 965, line 5 calculation is the total net tax liability and calculated as the difference between the tax without Section 965 income and with Section 965 income. This is Form 1040, line 56 before adding the Section 965 income to line 21 and Form 1040, line 56 after adding the Section 965 income to line 21.
The 965 analyst is adding a drilldown to line 5 on Release 2017.04000.
Question regarding refunds and Section 965:
A refund is calculated due to an overpayment of estimated tax is present and there is an election under 965(h)(1) to pay the tax due in installments. According to the IRS Q&A, no refund can be issued until all installment payments have been made. I'm not sure if this means that installments are not allowed when there are sufficient payments in the current year or if the refund should be reduced by the amount of the remaining installments.
Per research analyst: The IRS does not want any alternative presentation when the refund does not exceed the Sec. 965 tax liability and they are wanting to pay the 965 tax in installments. What the IRS is saying in Q&A14 is that the taxpayer won’t receive a refund until the 965 tax is paid in full. This is to be done by the IRS.
Section 965 increases the tax due in a tax return - it cannot cause an overpayment. Overpayments on tax returns due to payments made in the return will net against tax that includes Section 965 tax. If there is an overpayment, you WILL NOT get a 1040-V Section 965 voucher. You will only get a voucher when there is Section 965 tax to be paid in to the IRS.
