965-D

Transfer Agreement Under Section 965(i)(2)

Agency
IRS
Revision
December 2019
Fillable fields
44
Pages
2
Official source
IRS form page
Checked
October 21, 2026
Fill 965-D online
Page 1 of form 965-D

Form 965-D: Transfer Agreement Under Section 965(i)(2)

Form 965-D, Transfer Agreement Under Section 965(i)(2), is used by an eligible section 965(i) transferor and an eligible section 965(i) transferee to enter into a transfer agreement under section 965(i)(2). The instructions explain the background: an S corporation shareholder may elect to defer payment of a section 965(i) net tax liability until a triggering event occurs, and a covered triggering event does not trigger the liability if the transferee agrees to be liable for it in the same manner as if the transferee were the original electing taxpayer.

The two-page form identifies the transferor, the transferee and the S corporation, describes the triggering event, reports the unpaid liability being assumed, and asks about the transferee's ability to pay. Part VII sets out the terms both sides agree to, and each side signs. The form is marked File in Duplicate.

You can fill out Form 965-D free in your browser on this page and download it without an account.

What's on Form 965-D

Parts I and II: transferor and transferee

Name, taxpayer identification number and address of each side.

Part III: the S corporation

Name and TIN of the S corporation with respect to which the section 965(i) election was effective.

Part IV: triggering event

Line 1 is the date, line 2 asks whether the transfer was by reason of the transferor's death, line 3 is the percentage of the deferred liability allocable to the transferred stock, and line 4 is a detailed description.

Part V: liability assumed

Line 5 is the dollar amount of the transferor's unpaid section 965(i) net tax liability being assumed.

Part VI: ability to pay

Line 6 asks whether the transferee is able to pay, line 7 whether its leverage ratio exceeded 3:1 immediately after the triggering event, and line 8 takes other information.

Part VII: terms and signatures

The terms of the agreement, including that the transferor stays jointly and severally liable, then separate signature blocks for the transferor and the transferee.

How to fill out Form 965-D

  1. 1

    Parts I to III

    Enter the transferor's complete legal name, TIN and street address or post office box, the transferee's name, TIN and address, and the S corporation's name and TIN.

  2. 2

    Lines 1 and 2

    Enter the date of the covered triggering event. Line 2 is Yes only if the event is the transferor's death. The instructions say a transfer from an estate to the beneficiaries is not that kind of event.

  3. 3

    Lines 3 and 4

    For a partial transfer, enter the percentage of the liability attributable to the transferred stock. For all of the stock, the instructions say to enter 100.00%. Then describe the event, such as a sale, gift or death.

  4. 4

    Line 5

    Enter the dollar amount of the transferor's section 965(i) net tax liability being assumed by the transferee. The instructions note the Commissioner may adjust it.

  5. 5

    Lines 6 to 8

    The instructions say a No on line 6 means the requirements for a valid transfer agreement are not met. Line 7 uses the leverage ratio defined in the instructions. Line 8 may cover income, assets and access to capital.

  6. 6

    Sign

    Each side signs through a person authorized to sign a return for it. The transferor certifies Parts I, III, IV and V; the transferee certifies Parts II, III, IV, V and VI.

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When and where to file, and copies

Deadline

Except when the event is the transferor's death, the instructions say the original Form 965-D is mailed within 30 days of the covered triggering event. No extension of time to file is granted.

Death of the transferor

The instructions say the transfer agreement is filed by the unextended due date for the transferor's final income tax return.

Mailing address

The 2019 instructions print an address for Memphis CSCO. The About page lists a 2021 recent development, Change to the Mailing Address for Filing Forms 965-D and 965-E, so check that notice before mailing.

Duplicate copies

Both the transferor and the transferee attach a duplicate copy to their tax returns for the tax years during which the covered triggering event occurs, filed by the due date (with regard to any extension).

Form 965-A copy

The instructions say a copy of the transferor's most recent Form 965-A is required to be included with Form 965-D.

IRS review

The Commissioner may ask for more information and may reject the agreement for a material misrepresentation or omission, or if requested information is not provided in time.

Related forms

Who files Form 965-D?

  • Eligible section 965(i) transferor

    A shareholder of an S corporation who has a section 965(i) net tax liability with respect to the S corporation and transfers its stock in a covered triggering event.

  • Eligible section 965(i) transferee

    A single U.S. person that becomes a shareholder of the S corporation through that transfer. The instructions say a foreign entity or a domestic pass-through entity is not an eligible transferee.

  • Not the S corporation

    The instructions say an S corporation cannot file Form 965-D on behalf of its shareholders. Part III only identifies it by name and TIN.

  • Multiple partial transfers

    A separate transfer agreement is filed for each partial transfer treated as a covered triggering event, with each eligible transferee.

  • Transfers at death

    When the covered triggering event is the transferor's death, special rules set the due date and may treat the transfer as going to the beneficiaries, or as two transfers through the estate.

The instructions say the form is filed by the eligible section 965(i) transferor and the eligible section 965(i) transferee for a covered triggering event, and may only be filed by them.

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Questions about Form 965-D

Who signs Form 965-D?

Both sides. The transferor and the transferee each sign through a person authorized to sign a return on their behalf.

Can the S corporation file it for its shareholders?

No. The instructions say an S corporation cannot file Form 965-D on behalf of its shareholders.

What is the deadline?

The instructions say within 30 days of the covered triggering event, except when the event is the transferor's death. Then it is the unextended due date for the transferor's final income tax return.

Can a late transfer agreement be filed?

The instructions say no extension of time to file is granted, and relief under Regulations section 301.9100-2 or 301.9100-3 is not available to enter into a transfer agreement late.

Does the transferor stay liable?

Part VII says the transferor and any successor remain jointly and severally liable for the section 965(i) net tax liability being assumed by the transferee.

Does a leverage ratio over 3:1 make the agreement invalid?

The instructions say the ratio is a factor in judging ability to pay, and a ratio in excess of three to one does not by itself determine whether a transfer agreement is valid.