i.r.c. § 965 sTATE cONFORMITY uPDATE - Oregon

As a result of the passage of the Tax Cuts and Jobs Act ("TCJA") enacted on December 22, 2017, treatment of deferred foreign income ("IRC §965"), was amended to require that taxpayers include the accumulated post-1986 deferred foreign corporation income in their federal taxable income for tax year 2017- a deemed repatriation.

Oregon now conforms, in part, to IRC §965 as amended under the TCJA.  It should be noted, while the amendment requires the income to be added back, at the earliest, on the 2017 return, the IRS allows the tax on the repatriated income to be paid over eight years.  However, Oregon does not have a comparable deferral provision.  Accordingly, the Oregon tax on the repatriated income is due by the due date of the Oregon return, excluding extensions.


i.r.c. § 965 sTATE cONFORMITY uPDATE - Indiana

As of Dec. 31, 2017, the IRS requires, under IRC § 965, any untaxed foreign earnings or profits to be treated as  repatriated dividends that must be reported on a taxpayer’s state and federal tax returns.  For federal purposes, the statute allows dividend received deduction for a portion of the foreign earnings in determining federal adjusted gross income.

Where taxpayers have foreign earnings or profits that have not been reported to the Internal Revenue Service or the Indiana Department of Revenue, they should be aware of the impact to their 2017 Indiana returns and the nuances between federal and state treatment of IRC § 965 repatriated dividends.