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Looming Cap On Borrowing Could Alter Financing Strategies

Law360 (February 23, 2018, 8:34 PM EST) -- In four years, the new tax law is scheduled to tighten restrictions on businesses claiming deductions for interest paid on borrowed funds, but highly leveraged companies already are evaluating how this imminent change will affect their cash flows and financing options.

The Tax Cuts and Jobs Act, P.L. 115-97, enacted in December, currently limits deductions for interest expenses to 30 percent of earnings before interest, taxes, depreciation and amortization, or EBITDA.

But starting in 2022, the law drops the last two letters from the six-letter acronym,...
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