Volume 5 No 4    |    Read Article

By Beate Erwin and Elizabeth V. Zanet

Prior to recent tax reform legislation, Code §163(j) was an earnings stripping provision that placed a cap on interest expense deductions on debt instruments held or guaranteed by foreign related persons that were not subject to full 30% withholding tax on U.S.-source interest income or guarantee fees. Under the T.C.J.A., Code §163(j) is now simply a cap on all business interest expense. Notice 2018-28 addresses open matters arising from the change. This includes the carryover of disallowed interest from prior years to 2018, the Super-Affiliation Rules under the new law, and the loss of excess limitation carryforwards. Elizabeth V. Zanet and Beate Erwin explain these and other items in the Notice.    See more →