Form 965‑D – Transfer Agreement to Preserve 965(i) Deferral

Editorial Standards

How we research, review, and update this guide

Every Accountably guide is researched against primary IRS sources, reviewed by a U.S. CPA, and refreshed as guidance evolves. Read our Editorial Guidelines to see how we source, fact-check, and update our content.

Form 965-D usually surfaces after the deal has already closed. A client mentions a stock transfer they signed last week, the §965(i) deferral sitting on the transferor's Form 965-A is suddenly at risk, and the clock to Memphis has already started. The work itself is not complicated, but the calendar is, and there is no §9100 relief if the agreement lands late.

Form 965-D is the IRS transfer agreement an eligible S corporation shareholder uses to assign a deferred Section 965(i) net tax liability to an eligible transferee after a triggering event. Both parties sign under penalties of perjury, you must file in duplicate within 30 days of the triggering event, and you mail the original to Memphis CSCO, 5333 Getwell Road MS 81, Memphis, TN 38118. The transferor stays jointly and severally liable for the assumed amount, so a missed attachment or signature can void the deferral.

Key Takeaways

• Form 965‑D is the IRS transfer agreement that moves an S corporation shareholder’s deferred Section 965(i) tax to a qualified transferee after a triggering event, so the tax does not accelerate.
• You must file the original agreement by paper within 30 days of the triggering event, and attach a duplicate to both parties’ timely filed returns. There is no 9100 relief for late filing.
• Mail the original to Memphis CSCO, 5333 Getwell Road MS 81, Memphis, TN 38118. The IRS confirmed a mailing address change and the current instructions list Memphis.
• The transferee must be a single U.S. person who becomes a shareholder. The agreement requires specific representations, including ability to pay, and the transferor remains jointly and severally liable.
• Include the transferor’s most recent Form 965‑A and describe the triggering event clearly. Missing attachments or signatures can void deferral.

What Form 965‑D actually does

Form 965‑D documents a transfer agreement under Section 965(i)(2). It lets you move a shareholder’s deferred Section 965(i) net tax liability to a qualified transferee when a triggering event occurs, most commonly a stock transfer. If the agreement meets the regulation and instruction requirements and is filed on time, the IRS treats the transferee as if they were the taxpayer with respect to the stock, which preserves the deferral and keeps the installment pathway available.

In plain terms, Form 965‑D is the formal handoff of a deferred 2017 transition‑tax balance from the seller to the buyer when stock changes hands, and it prevents an immediate tax bill for the seller.

To be valid, the transfer agreement must, among other items, identify both parties with names, addresses, and TINs, state the unpaid Section 965(i) net tax liability, describe the triggering event, include the latest Form 965‑A, and be signed under penalties of perjury by authorized signers for both sides. The IRS can request more information, and it can reject the agreement if there is a material omission or misrepresentation.

When Form 965‑D is required

You use Form 965‑D when a triggering event would otherwise cause a shareholder’s deferred Section 965(i) liability to be assessed now, and you want a qualified transferee to assume that liability. Typical triggering events include transfers of any share of S corporation stock by the shareholder, the S corporation ceasing to be an S corporation, or a sale or liquidation of substantially all assets. Partial stock transfers can trigger a proportional portion of the deferred liability.

Common triggering events you should flag early

• A sale, gift, or other disposition of S corporation stock by the electing shareholder.
• The S corporation becomes a C corporation, or it liquidates or sells substantially all assets.
• Shareholder death, which has special timing rules and beneficiary mechanics for the transfer agreement.

If you are looking at a transaction term sheet and you see any of the above, pause. Confirm whether the shareholder made the 965(i) deferral election for 2017, pull the most recent Form 965‑A, and plan the 965‑D filing as a closing deliverable.

Who qualifies as a transferee

Regulations say the transferee must be a single U.S. person who becomes a shareholder. The rule includes certain trust and estate contexts, but not a domestic pass‑through entity itself. In the agreement, the transferee must represent ability to pay, and both parties must acknowledge that the original transferor remains jointly and severally liable for the assumed balance. That joint exposure is real, so accuracy matters.

Why the 30‑day rule is non‑negotiable

The IRS considers a 965‑D transfer agreement timely only if filed within 30 days of the triggering event, with a death exception that ties to the unextended due date of the final return. You also must attach a duplicate with both parties’ timely filed returns. There is no 9100 relief for late agreements, and the IRS can reject agreements that have material omissions. Treat the 30‑day clock as the controlling standard, independent of any return extension.

If you need installment payments because the triggering event is an S corporation asset sale or similar, you also need consent under Section 965(i)(4)(D), which is done on Form 965‑E, and it has the same 30‑day window. Do not confuse the two. The 965‑D handles the transfer, the 965‑E handles consent for installments in that specific scenario.

How Form 965‑D works in practice

Think of it as a short, high‑stakes contract with the IRS. You and the transferee fill in the required identification and representations, you show the exact unpaid deferred Section 965(i) balance, and you describe the triggering event. Both sides sign under penalties of perjury. You attach the transferor’s most recent Form 965‑A, and you file within 30 days by mailing the original to Memphis CSCO, then attach copies to both tax returns for the year of the event. Done correctly, the transferee steps into the shoes of the transferor for that balance (signing the agreement begins, not ends, the transferee's duties – ongoing annual reporting and other §965 compliance under Treas. Reg. §1.965‑7(c) continues until the assumed liability is fully paid).

The core elements at a glance

Item	What you include	Who is responsible
Identification	Names, addresses, TINs for transferor and transferee	Both parties
Liability	Exact unpaid Section 965(i) net tax liability, or the portion allocable to the transferred shares	Transferor determines, subject to IRS adjustment
Triggering event	Description, date, and S corporation details	Transferor
Ability to pay	Transferee representation of capacity to pay	Transferee
Joint and several	Acknowledgement that transferor remains jointly and severally liable	Both parties
Leverage ratio	Statement whether transferee’s leverage ratio exceeds 3 to 1	Transferee
Attachments	Latest Form 965‑A for the transferor	Transferor
Signatures	Authorized signers under penalties of perjury	Both parties

Pro move, put the unpaid balance calculation and the triggering event description through a second reviewer. Most rejected packages I see fail on math tie‑outs or vague event descriptions.

Step‑by‑step completion guide

1.Confirm eligibility and facts

• Verify the shareholder made a Section 965(i) deferral election for 2017.
• Identify the triggering event and the exact date.
• Determine who will be the eligible transferee, and confirm they will be a U.S. person who becomes a shareholder.

2. Gather documents

• The transferor’s most recent Form 965‑A.
• Purchase or transfer agreements and cap table updates that evidence the triggering event.
• EINs, legal names, and addresses for both parties.

3. Draft the agreement on Form 965‑D

• Complete identification lines for transferor and transferee.
• State the unpaid Section 965(i) net tax liability, or the proportional amount for a partial stock transfer.
• Describe the triggering event, include the S corporation’s name and TIN, and add dates.
• Include the transferee’s representation that they can pay, and the leverage ratio statement.

4. Review for consistency and tie‑outs

• Reconcile the stated unpaid balance to Form 965‑A.
• If the event is an S corporation asset sale where 965(i)(4)(D) consent will be needed for installments, prepare Form 965‑E on the same timeline.

5. Execute with correct signatures

• Authorized signers for both parties must sign under penalties of perjury.
• Date the agreement accurately. Keep the original with wet signatures for your files.

6. File on time and in the right places

• Mail the original within 30 days to Memphis CSCO, 5333 Getwell Road MS 81, Memphis, TN 38118. Use a tracked courier.
• Attach duplicate copies to both parties’ returns for the year of the event, filed by the due date, including extensions.

7. Monitor acknowledgement and follow up

• The IRS can ask for more information about ability to pay or other details. Respond promptly to avoid a rejection that could be deemed effective as of the original triggering event date.

Special rule when the shareholder dies

If the triggering event is death, the due date for the transfer agreement is the unextended due date of the decedent’s final return, not the 30‑day rule. If beneficiaries are known by that due date, you can treat it as a direct transfer to the beneficiaries. If not, you will file two agreements, one to the estate at death and another when the estate actually transfers the shares to beneficiaries.

Checklist you can copy into your workpapers

• Confirm 965(i) deferral existed for 2017.
• Identify and date the triggering event.
• Pick a transferee who will be a single U.S. person and a shareholder.
• Pull and reconcile Form 965‑A.
• Draft 965‑D with all required statements.
• Obtain signatures under penalties of perjury.
• Mail original to Memphis within 30 days.
• Attach duplicates to both returns.
• If an S corporation asset sale, file 965‑E to request consent for installments within 30 days as well.

Filing methods, deadlines, and addresses

You must file Form 965‑D by paper. The original is mailed to Memphis CSCO, 5333 Getwell Road MS 81, Memphis, TN 38118, and duplicate copies must be attached to both the transferor’s and the transferee’s returns for the year the triggering event occurs. Even if your return is on extension, the separate 30‑day clock for the transfer agreement controls timeliness. There is no relief under Reg. 301.9100 for late agreements.

You may see older IRS Q&As that reference Brookhaven. The IRS later announced a mailing address change for Forms 965‑D and 965‑E, and the current instructions and “About Form 965‑D” page reflect Memphis. When in doubt, follow the current instructions page and the form’s instructions, both of which have been updated more recently.

Practical tip, use certified mail or a reliable courier, keep proof of delivery, and include a cover letter that lists all enclosures and the triggering event date.

The 30‑day timing rule, spelled out

• 965‑D transfer agreements, 30 days from the triggering event, with a death exception as described above.
• 965‑E consent agreements for installment treatment after certain 965(i)(2)(A)(ii) events, 30 days from that triggering event.
• Duplicate copies for both returns, attached to the tax returns for the event year, due with those returns, including extensions.

Eligibility and calculation rules that trip people up

You can only file 965‑D if the shareholder made a Section 965(i) deferral election for 2017 and a covered triggering event occurs. The transferee must be a single U.S. person who becomes a shareholder, not a domestic pass‑through entity itself. State the balance precisely. If you are transferring less than all the shares, only the portion of the deferred liability allocable to the transferred shares moves. Document the math in a short schedule and tie it to the latest 965‑A.

The agreement also requires a leverage ratio statement and an ability‑to‑pay representation from the transferee (a ratio above 3:1 does not automatically void the agreement, but it is an ability‑to‑pay factor the IRS weighs and may prompt the Commissioner to request additional information). The IRS can ask for additional support and can reject the agreement for material omissions or misstatements, which can cause an immediate liability.

Joint and several liability, what it means here

Even after a valid transfer, the original shareholder remains jointly and severally liable for the unpaid installment amounts that were assumed, including penalties and additions to tax. In plain English, if the transferee does not pay, the IRS can still come back to the original shareholder. This is why careful transferee diligence and precise documentation matter.

Coordination with related forms and elections

• Form 965‑A, attach the transferor’s most recent copy to the 965‑D package so the IRS can verify the unpaid balance.
• Form 965‑B, use where applicable for corporate filers’ reporting history.
• Form 965‑C, this is the sibling transfer agreement for 965(h) installment liabilities after acceleration events. Same 30‑day rule, same Memphis address.
• Form 965‑E, use this to request the Commissioner’s consent to make a 965(h) election after certain 965(i) triggering events like an S corporation asset sale. File within 30 days and attach to the return.

Put these on a single closing checklist. If your transaction is a stock transfer, you likely need only 965‑D. If your transaction is a substantial asset sale by the S corporation, you may need 965‑E for consent plus a 965(h) election to go on installments. The facts decide the stack.

Common errors and simple fixes

• Missing or incorrect TINs or addresses for either party. Solution, validate against IRS records before you print.
• No Form 965‑A attached. Solution, attach the most recent Form 965‑A for the transferor.
• Vague description of the triggering event. Solution, name the S corporation, the type of event, the exact date, and the stock percentage or count transferred.
• Late filing. Solution, build the 30‑day mailing into your closing checklist and ship by tracked courier. There is no 9100 relief for late agreements.
• Missing signatures or wrong signers. Solution, validate signatory authority, then sign under penalties of perjury.

Real‑world workflow tips

• Build a one‑page 965‑D packet checklist that includes identification, unpaid balance tie‑out to 965‑A, event description, ability‑to‑pay, leverage ratio, and signature blocks.
• Pre‑populate the Memphis address label and your cover letter template.
• For stock deals, add “965‑D filed” as a closing condition. For S corporation asset sales, add “965‑E filed” and “965(h) election made” as conditions.

If you are leading a firm, you already know that consistent delivery is what protects trust. This kind of filing rewards firms that have SOPs for workpapers, naming, and review. If you want a partner that brings structure, trained offshore teams, and a disciplined review layer without sacrificing control or quality, Accountably can help you standardize documentation and reduce rework across compliance workflows. Use us only where it makes sense, especially when transaction timelines put pressure on your team’s capacity.

Compliance note and sources

This article reflects IRS instructions and regulations reviewed as of January 2, 2026. Always confirm current instructions and addresses before mailing. Key sources include the final regulations and current IRS instructions and pages.

Conclusion

You can keep Section 965(i) deferral intact after a triggering event if you act quickly and get the Form 965‑D transfer agreement right. Identify the event, pick a qualified transferee, tie the unpaid balance to the latest 965‑A, sign under penalties of perjury, and file within 30 days to Memphis CSCO. If your facts require 965‑E and a 965(h) election, add those to your checklist on the same timeline. The steps are straightforward, but the deadlines are unforgiving. If anything is unclear, pause and get a second set of eyes before the 30‑day window closes.

Common Mistakes We See Every Season

Most 965-D problems are not technical. They are timing, signature, and tie-out errors that surface after the 30-day window closes, and by then acceleration is already on the table. Six patterns repeat almost every transaction.

Reusable Checklists

These three checklists are copy-paste ready for firm SOPs. They cover the pre-file packet, the 30-day calendar, and the transferee's ongoing annual tracking once the assumed liability is on their books.

Keep 965-D Season From Stalling

Form 965-D never shows up in a quiet quarter. It lands on the desk when an S corporation shareholder sells stock, dies, or otherwise triggers acceleration of a §965(i) deferred liability that has been sitting on Form 965-A since the original transition-tax filing year (IRC §965 was enacted under the Tax Cuts and Jobs Act of 2017). The 30-day filing window runs from the triggering event itself, not from the related annual return due date per Treas. Reg. §1.965-7(c), and there is no §9100 relief if the team misses the calendar.

The pattern that trips firms up is treating 965-D as a tax-season filing instead of a transaction-deadline filing. The fix is to wire the form into the transaction workflow the same way a closing team wires in a Form 8594 asset-allocation schedule or a §338(h)(10) election.

• Calendar day 30 the moment a §965(i) deferral client signals a pending stock transfer, S corp termination, or asset sale.
• Tie Line 5's dollar amount of unpaid §965(i) net tax liability being assumed back to the most recent Form 965-A balance before drafting the agreement.
• Pre-route Parts I, III, IV, V to the transferor and Parts II, III, IV, V, VI to the transferee, with print name, title, email, and daytime phone in each signature block.
• Compute Line 7's leverage ratio at fair market value (total liabilities to net assets) and document the calc whether the ratio is over or under 3:1.
• Ship two signed originals to Memphis CSCO with a tracked courier and attach duplicate copies to both parties' returns for the year of the event.

That structure is what our team brings to transition-tax filings. If you want documented SOPs, multi-layer review, and a 30-day clock that does not rely on memory, our tax services team can plug into the transaction workflow so 965-D never slips between deal close and the next quarter.

FAQs

What counts as a Section 965(i) triggering event for an S corporation shareholder?

Stock transfers by the electing shareholder, the S corporation ceasing to be an S corporation, and liquidations or sales of substantially all assets are triggering events. Partial stock transfers trigger a proportional amount of the deferred balance.

Who can be an eligible transferee on Form 965‑D?

A single U.S. person who becomes a shareholder. Trusts and estates can qualify in specific cases, but not a domestic pass‑through entity itself. The agreement must include the transferee’s ability‑to‑pay representation.

Where do I mail Form 965‑D today?

Mail the original to Memphis CSCO, 5333 Getwell Road MS 81, Memphis, TN 38118. Attach duplicate copies to both parties’ returns for the year of the event. The IRS notes a mailing address change for 965‑D and 965‑E, and current instructions list Memphis.

Does a return extension extend the 30‑day deadline for 965‑D?

No. The 30‑day clock runs from the triggering event. You still attach duplicates to both returns by their due dates, including extensions, but timeliness of the transfer agreement is judged by the 30‑day rule.

Can the IRS reject a filed transfer agreement?

Yes. The IRS can ask for more information and can reject an agreement for material omissions or misrepresentations. A rejection can be treated as if it were effective on the triggering event date, which can cause immediate assessment.

Do I need 965‑E too?

Only in scenarios that require the Commissioner’s consent to use 965(h) installments after certain 965(i) triggering events, such as an S corporation asset sale. File 965‑E within 30 days and make the 965(h) election properly.