The Internal Revenue Service (IRS) today issued final regulations under Internal Revenue Code section 163(j) on the limitation on the deduction for business interest expense. The rulemaking reflects changes made by the Tax Cuts and Jobs Act of 2017 (TCJA) and the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The rules cover the application of the limitation on the deduction for business interest expense for passthroughs, regulated investment companies (RICs), and controlled foreign corporations. "The regulations also provide guidance regarding the definitions of real property development, real property redevelopment, and syndicate," the IRS explains. "The regulations affect taxpayers that have business interest expense, particularly passthrough entities, their partners and shareholders, as well as foreign corporations...." The regulations also affect "RICs that have business interest income, RIC shareholders that have business interest expense, and corporations that are members of a consolidated group," the IRS notes. 

Today's rulemaking was issued in early "pre-release" form. The next step is for the IRS to file the rules with the Office of the Federal Register for public inspection. That date is not certain but should occur in the coming days.

The 178-page text of the regulations is posted here.

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