IRS releases guidance on section 163(j) excess interest expense limitation and section 871(m) dividend equivalent payment sourcing

February 2012


In Chief Counsel Advice 201202021 the IRS addressed whether removing the section 163(j) limitation on interest deductibility with respect to certain indebtedness qualifies as a change in accounting method under section 446. As discussed in this newsalert, the IRS concluded that there was not a change in accounting method.

The IRS also released new regulatory guidance regarding swap contracts over US equities that call for "dividend equivalent payments" to be subject to up to 30 percent gross US withholding. This newsalert highlights the major points addressed in these temporary and proposed regulations.

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