Since the 2017 tax act enacted the new §163(j) limitation on interest deductions, multinationals have been asking whether the limitation applies to controlled foreign corporations (CFCs).
1. Proposed regulations released November 26, 2018, would answer that question in the affirmative.
2. But other questions remain. The biggest decisions now for multinationals are
(i) whether to elect into early application of the proposed regulations, starting in 2018, and
(ii) whether to make the irrevocable election (CFC Group Election) to apply §163(j) to CFCs under modified rules: rules that are generally more favorable, but also far more complex.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
