Publications

A June 2019 article from the Ruchelman PLLC journal Insights about the source of the new interest deductibility rules under U.S. tax reform The limitation of interest deductibility to approximately 30% of E.B.I.T.D.A. (earnings before interest, tax, depreciation, and amortization) introduced in amended Code §163(j) has focused the attention of U.S. corporations and their lenders on a new constraint.  For companies with sales less than $25 million that borrow from a foreign parent, the body of case law in the style of Mixon and Laidlaw has remained the standard against which interest deductibility is evaluated by the I.R.S.  Large subsidiaries of foreign parents that do not qualify for the Code §246 gross sales exemption of $25 million are accustomed to (i) proving their capacity to carry and service debt and (ii) demonstrating that the rate of interest and other terms attaching to a cross-border loan… Read More »Debt characterization under domesticated international rules