PwC submitted, on behalf of a group of companies, a comment letter on May 30, 2018 in response to Notice 2018-28, Initial Guidance Under Section 163(j) as Applicable to Taxable Years Beginning After December 31, 2017. The Notice announced that Treasury and the IRS plan to issue proposed regulations on Section 163(j).
Treasury and the IRS requested comments on both the rules described in the Notice and any additional issues that these regulations should address. The Notice provided that the regulations will address the interaction of Section 163(j) (limitation on business interest expense deductions) with Section 59A (‘the Base Erosion and Anti-Abuse Tax,’ or BEAT).
Our letter provides background, comments, and recommendations on the application of Section 59A to interest disallowed under Section 163(j) for years beginning prior to January 1, 2018 and carried forward to years beginning after December 31, 2017.