Page 786 - Large Business IRS Training Guides

Affiliated and Consolidated Groups
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• Section 965(b)(5)
allows U.S. shareholders that are members of the same affiliated
to take into account the affiliated group’s
group (as defined in section 1504)
aggregate unused E&P deficit.

a section 958(a) U.S. shareholder that has an overall section 965(a)
• Specifically,
with respect to all of the SFCs it owns (an “E&P net surplus
inclusion amount
shareholder”) is
allowed to reduce its section 965(a) inclusion amounts by its
applicable share of the affiliated group’s
aggregate unused E&P deficit.

aggregate unused E&P deficit is determined by reference to only
• An affiliated group’s
those section 958(a) U.S.
shareholders that have an aggregate foreign E&P deficit
that exceeds
their aggregate pro rata share of section 965(a) earnings amounts, and
is the sum of such excess.

Reg. §1.965-8 provides special rules related to the application of section
• Treas.
965(b)(5),
and treats a consolidated group that is part of an affiliated group as a
the affiliated group for this purpose.
single member of

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