Thin Capitalization Rules

"Thin Capitalization Rules” found in Internal Revenue Code Section 163(j) limit tax deductions companies can take on loans from related and unrelated parties (with a parent company guarantee).  Though these rules apply on paper to both domestic and foreign-based firms, in practice, they overwhelmingly target U.S. subsidiaries of foreign companies because they are more likely to seek financing from a parent company to conduct business in the U.S.

Resources:

OFII Comment Letter to Treasury Department on the proposed regulations issued under IRC Sec. 385, July 2016

OFII, BRT, and PwC Analysis of IRC Sec. 385 proposed regulations, July 2016

OFII Coalition Letter to Chairman Brady, Chairman Hatch, Ranking Member Levin, and Ranking Member Wyden regarding IRC Sec. 385 proposed regulations, June 2016

OFII Coalition Letter to Secretary Lew regarding IRC Sec. 385 proposed regulations, May 2016

OFII Comment Letter to Ways and Means Committee on "The Global Tax Environment," February 2016

OFII Comment Letter to Treasury Department on the revised U.S. Model Tax Convention, September 2015

OFII Comment Letter to Senate Permanent Subcommittee on Investigations on "Market for Corporate Control and Jobs," July 2015

OFII Comment Letter to Senate Finance Committee Tax Reform Working Group, April 2015

OFII Comment Letter to Ways and Means Committee on "Moving America Forward", January 2015

OFII Comments to the OECD on BEPS Action 4: Interest Deductions and Other Financial Payments Discussion Draft, February 2015

OFII Comments to the IRS on Notice 2014-52 on OECD BEPS Project and FY2015 Treasury Green Book Proposal, November 2014

OFII Letter to the Treasury Department on OECD BEPS Action Item 4, November 2014

OFII, NAM, NFTC and U.S. Chamber Letter on Interest Deductibility Limitations Legislation, S.2786, October 2014

OFII Letter to Senate Finance Committee on 163j, August 2014

OFII Comments to the Ways and Means Tax Reform Working Group on Debt, Equity, and Capital, April 2013