Treasury and IRS Release Final Regulations under Section 163(j) with respect to Partnerships and CFCs

On January 5th, the Department of the Treasury and the Internal Revenue Service released final regulations under section 163(j). Amended by the Tax Cuts and Jobs Act (TCJA), section 163(j) generally limits a taxpayer’s interest deduction to the sum of its business interest income, floor plan financing interest, and 30% of its adjusted taxable income (ATI). The regulations finalize portions of the regulations that were proposed in September 2020, which related to the application of section 163(j) to partnerships and controlled foreign corporations (CFCs). The final regulations generally retain the provisions of the proposed regulations, with certain changes, such as clarifying the ATI computation and reserving on a provision of the proposed regulations under which a U.S. shareholder’s ATI was increased by its portion of specified deemed inclusions from CFCs.

Read More: Final Regulations

Read More: Proposed Regulations

Back to top