OverviewTreasury and the IRS released Notice 2018-28 (the Notice) on April 2, 2018. The Notice provides interim guidance and describes proposed regulations that they intend to issue on the limitation on business interest expense deduction under amended Section 163(j) for tax years beginning after December 31, 2017.The Notice identifies issues that the proposed regulations will cover, but specifically addresses several of the uncertainties with which taxpayers have been grappling since Section 163(j) was amended.
- 163 J Proposed Regulations Deloitte
- Section 163 J Proposed Regulations Deloitte
- Treasury Proposed Regulations 163 J
163 J Proposed Regulations Deloitte
26, 2018, the IRS issued proposed regulations under the Internal Revenue Code (IRC) § 163(j) enacted by the Tax Cuts and Jobs Act of 2017 (the Proposed Regulations). Generally, IRC § 163(j) limits certain taxpayers’ business interest expense deduction to the sum of (i) the taxpayer’s current year business interest income, (ii) 30 percent of the taxpayer’s adjusted taxable income (ATI) from a trade or business, and (iii) certain floor plan financing interest expense. Any disallowed business interest expense (i.e., excess business interest expense) can be carried forward indefinitely and treated as business interest expense in future years. Taxpayers with average annual gross receipts of 25 million or less, tested for the three taxable years immediately preceding the current taxable year, are not subject to the above limitations.
Section 163 J Proposed Regulations Deloitte
In addition, certain activities (referred to as “excepted trades or businesses”) are excluded from the definition of a trade or business for purposes of IRC § 163(j). Such activities include (i) the trade or business of providing services as an employee; (ii) certain electing real property businesses; (iii) certain farming businesses; and (iv) certain regulated utility businesses.The Proposed Regulations are 439 pages long and are divided into eleven sections.
Treasury Proposed Regulations 163 J
What REITs Should Know About Section 163(j) Interest Limitation. Mark Van Deusen, principal at Deloitte, participated in a video interview at Nareit’s REITwise: 2019 Law, Accounting & Finance Conference in San Antonio. “The government has attempted in the proposed regulations under 163(j) to create some rules that would be helpful.