Interest expense limitations to trigger changes in financing private equity deals
The rules governing the deductibility of business interest expenses have become much more complicated following modifications to Internal Revenue Code (IRC) Section 163(j) as part of the 2017 Tax Cuts and Jobs Act (TCJA). Owners of private equity (PE) firms need to understand these new federal (and state) income tax rules when structuring debt, and they should model how the borrower’s interest expense (and, potentially, lender’s interest income) will be treated during the expected life of the debt.
In a newly published article for Bloomberg Tax, CohnReznick’s Jeremy Swan discusses the general rules, especially as they apply to PE firms, and outlines steps that PE firms can take now to address them, before the final regulations are released.
Read the article at BloombergTax.com, or download the PDF below.
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Strategic Tax Issues for Capital Markets