Page 741 - Large Business IRS Training Guides

Basis
Adjustment Election

• A binding election under Treas. Reg. §1.965-2(f) allows a section 958(a)
U.S.
shareholder’s basis in the stock of a DFIC to be increased by part
or al l
of the section 965(b) PTEP of that corporation to the extent there is
a commensurate reduction in basis
with respect to the stock of the
section 958(a)
U.S. shareholder’s EPDFC.
adjustment election must be made no later than the due date
• The basis
(taking into account
extensions, if any) of the section 958(a) U.S.
shareholder’s
return for the first taxable year that includes the last day of
the last
taxable year of a DFIC or an EPDFC of the shareholder that
begins
before 1/1/18.

• A “transition rule” allows taxpayers whose returns were due before
5/6/19 to make the binding basis
election and taxpayers who made a
election before 2/5/19 to revoke the previously-made election by
basis
5/6/19.

• The section 958(a)
U.S. shareholder and all related persons must make
adjustment election, and it applies to all DFICs and EPDFCs.
the basis

63