Analysis

New Internal Debt Rules Could Hamper Tax Enforcement

Law360 (November 5, 2019, 7:55 PM EST) -- The U.S. Department of the Treasury's planned paring down of Obama-era internal debt regulations could put the Internal Revenue Service at a disadvantage in targeting abusive transactions meant to strip the U.S. income tax base.  

Treasury has announced it intends to replace earnings stripping rules issued by President Barack Obama's administration in 2016. (AP) The current earnings stripping rules under Internal Revenue Code Section 385, adopted in 2016, automatically sweep in related party debt instruments based on a formula, and companies have complained they capture many legitimate transactions entered into for nontax reasons. President Donald Trump's administration, in its Thursday notice of...

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