The Resource New interest limitation rules can be costly

New interest limitation rules can be costly

Label
New interest limitation rules can be costly
Title
New interest limitation rules can be costly
Creator
Subject
Language
eng
Summary
The classification of debt vs. equity has been an issue the IRS has struggled with for years in various contexts. Put simply, interest is deductible whereas dividends are predicated on after-tax earnings and profits and hence nondeductible. Section 163(j) was promulgated originally with a primary focus on the abuse of earnings stripping for inbound structures created by offshore corporate and individual investors. The provision was intended to curtail this perceived exploitation by disallowing interest as a deduction where the debt to equity ratio was greater than 1.5 to 1. This is statistically the average debt to equity ratio for both U.S. and international companies. The Tax Cuts and Jobs Act (TCJA) repealed the earnings stripping rules and replaced them with a restrictive and pervasive overall business interest expense limitation
Citation source
In: Practical tax strategies. - Hoboken. - Vol. 100 (2018), no. 3 ; p. 17-21
http://library.link/vocab/creatorName
  • Szabo, M
  • Goodman, M
Geographic coverage
North America
Language note
English
http://library.link/vocab/subjectName
  • interest deduction
  • earnings stripping
  • TCJA
Label
New interest limitation rules can be costly
Instantiates
Publication
Label
New interest limitation rules can be costly
Publication

Library Locations

    • IBFD Library AmsterdamBorrow it
      Rietlandpark 301, Amsterdam, 1019 DW, NL
      52.3736660 4.9336932
Processing Feedback ...