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U.S. Provides Details on New Interest Expense Limitations

U.S. Provides Details on Interest Expense Limitations

The U.S. released new proposed regulations affecting interest expenses.


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​Canadian companies that do business in the United States should determine how they will be affected by new proposed regulations affecting interest expenses. The IRS has now published proposed regulations that provide new details on the expanded application of the interest expense limitations in section 163(j) of the Internal Revenue Code, which were first included in the sweeping U.S. tax reform changes introduced in late 2017. These proposed regulations, which are sometimes referred to as "earnings stripping rules", may deny a deduction for certain interest expenses paid to both related and unrelated lenders. Previously, these rules only applied to interest paid to foreign related parties.

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