Page 776 - Large Business IRS Training Guides

Cash Reduction Transactions &

Specified Distributions

• A cash reduction transaction is
presumed to be undertaken with a
purpose of changing the amount of a 965 element of a U.S.
principal
unless the transaction occurs in the ordinary course of
shareholder
business.

• A cash reduction transaction includes:

• A transfer of cash, accounts receivable, or cash-equivalent assets by
to a U.S. shareholder of the SFC or a person related to a U.S.
an SFC
shareholder of
the SFC, or
the SFC of an account payable of the U.S.
• An assumption by
the SFC or a person related to the U.S. shareholder of
shareholder of
the transfer or assumption reduces the aggregate foreign
the SFC, if
cash position of
the U.S. shareholder.

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