On January 15, 2019, final regulations under Section 965 were made available on the IRS website. The final regulations are expected to be published shortly in the Federal Register. The final regulations are generally consistent with the proposed regulations published on August 9, 2018, but make certain modifications. Notable changes include:

• Excluding certain commodities from the cash position of a specified foreign corporation (SFC)
• Requiring a US shareholder of an SFC at any point during the inclusion year to include in gross income its pro rata share an SFC's Section 965 amount, even if the SFC ceases to be an SFC during the transition year
• Clarifying the inclusion ordering rules, including for Section 1248 amounts and amounts paid between SFCs that are disregarded for Section 965 purposes
• Clarifying that Section 965(b) previously taxed earnings and profits (PTI) are treated as included under Section 951 for purposes Section 1248(d)(1)
• Allowing a US shareholder to limit the basis adjustments required under the basis-shifting election to avoid gain recognition from the election
• Allowing US shareholders to elect to not disregard payments between SFCs occurring between E&P measurement dates
• Making foreign taxes associated with a hovering deficit available to the extent of current E&P of the SFC with the hovering deficit
• Taking only actual Section 956 inclusions into account in the "without" calculation when calculating the net tax liability for purposes of the Section 965(h) installment election
• Determining the aggregate foreign cash position of a consolidated group by treating the consolidated group as a single US shareholder

A Tax Alert on the final regulations is forthcoming and will highlight changes between the final and proposed regulations.