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.
Any advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues. Nor is it sufficient to avoid tax-related penalties. This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice specific to, among other things, your individual facts, circumstances and jurisdiction. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
Strategic Tax Issues for Capital Markets