The US IRS today published in the Federal Register final regulations (TD 9905) that provide guidance on the business interest expense deduction limitation, as amended in the 2017 Tax Cuts and Jobs Act. The regs are slightly different from an advance copy of the final regs, released by the IRS on July 28. The Federal Register version of the regulations is the official document.
Unlike the advance copy, the final regulations published in the Federal Register clarify that taxpayers may rely on the final regulations for any taxable year beginning after December 31, 2017, provided that certain conditions are met, the Service said in a statement released today.
The changes were made in response to questions from taxpayers and practitioners, the Service said.
Also, the official Federal Register version of the final interest deduction regulations makes further “minor editorial changes,” the IRS said.
The Service noted that the earlier version of the final regs contained a disclaimer stating that they may vary slightly from the final and official document published in the Federal Register.
The new tax regulations provide guidance to taxpayers on how to calculate the interest deduction limitation, what constitutes interest for purposes of the limitation, which taxpayers and trades or businesses are subject to the limitation, and how the limitation applies in consolidated group, partnership, international, and other contexts.
The regs are accompanied by a set of proposed regulations (REG-107911-18) that aim to characterize interest expense associated with debt proceeds of partnerships and S corporations, address special rules for dividends paid by RICs, and cover interest deduction limits on US shareholders of controlled foreign corporations and on foreign persons with effectively connected income.
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