Navigating IRC Section 163(j) compliance

As interest rates rise and the rules for adjusted taxable income (ATI) tighten, many businesses are finding it harder to deduct their interest expenses under IRC section 163(j). This section puts limits on how much of your business interest can be deducted, which can impact companies with significant debt. It’s essential to understand these limitations and explore options like tax elections or adjusting your capital structure to mitigate the impact.

Deloitte offers key insights to help you navigate these challenges, including how the limits are calculated, how different businesses are affected, and strategies to manage your interest expenses. By taking the right steps now, you can help stay compliant and analyze your tax situation considering IRC section 163(j).