BTAX OnPoint: Business Interest Expense Limit Final Regulations

The IRS released final regulations (T.D. 9905) on Tuesday implementing the Tax Cuts and Jobs Act changes to the business interest expense limitation under Section 163(j).

These new regulations, which have not yet been published in the Federal Register, amended earlier proposed regulations (REG-106089-18; RIN: 1545-BO73) issued in 2018.

The final regulations include several significant changes, including a narrower definition of “interest,” potentially resulting in a larger business interest expense deduction. They also provide that expenses for depreciation, amortization, and depletion deducted in a tax year beginning in 2021 or earlier—including amounts capitalized into inventory ...