AICPA Makes Recommendations on Proposed Regulations to Implement TCJA Limitations on Deduction of Business Interest Expense

February 21, 2019

  • AICPA’s suggestions to the U.S. Department of the Treasury and IRS covered a range of topics, including definition of interest and application of changes to consolidated groups, partnership items and international tax items
Washington, D.C. (February 21, 2019) – The American Institute of CPAs (AIAICPA) wrote today to the U.S. Department of the Treasury and the Internal Revenue Service (IRS) making recommendations about the proposed regulations (REG-106089-18) to implement changes made by the Tax Cuts and Jobs Act (TCJA) to Internal Revenue Code section 163(j), the limitation on the deduction for business interest expense.

The AICPA’s recommendations covered a range of topics including the definition of interest, the application of section 163(j) to consolidated groups, to partnership-related items and to international tax items.  Also addressed are allocation rules, ordering and operating rules and the interaction of section 163(j) and section 108, which pertains to income from discharge of indebtedness.

The AICPA noted in its comments that “the TCJA substantially amended section 163(j) by placing additional limitations on the deduction of business interest expense for taxpayers and expanding the group of taxpayers to which it applies.”

The AICPA commented on July 9, 2018 on Notice 2018-28, Initial Guidance Under Section 163(j) as Applicable to Taxable Years Beginning After December 31, 2017.