OIRA Receives Proposed Section 163(j) Regulations for Review

The Office of Information and Regulatory Affairs (OIRA) received draft proposed regulations under section 163(j), addressing the limitation on business interest deductions, on October 25, according to the Office of Management and Budget’s website. As amended by the Tax Cuts and Jobs Act (TCJA), section 163(j) generally limits business interest expense deductions to the sum of business interest income, 30% of adjusted taxable income, and floor plan financing interest. Existing questions regarding section 163(j) include how to allocate business interest between businesses that are exempt and not exempt from the section 163(j) limitation; approaches to allocating the business interest expenses; whether and how the limitation applies to controlled foreign corporations; and the interaction between section 163(j) and the FDII and GILTI provisions. Although the OIRA website doesn’t indicate if the section 163(j) regulations are expedited (thus giving the OIRA 10 days to review the regulations, rather than the standard 45 days), a Treasury official predicted that the review will be completed by OIRA next month. A second set of section 163(j) regulations related to partnerships and S corporations is scheduled for completion in December.

Read More: OMB Review of Business Interest Deduction Regs Underway