Before the Tax Cuts and Jobs Act (TCJA), the interest expense limitation in former Sec. 163(j) often applied to highly debt-leveraged domestic corporations with foreign related parties.
To prevent U.S. corporations from stripping earnings through interest deductions, the Internal Revenue Code provided for thin capitalization rules whereby the deduction for interest expense for corporations was limited in certain situations. But TCJA changed all this.
Learn more about these changes and some proposed regulations that provide for a method that would allow a group election for controlled foreign corporations (CFCs) for purposes of calculating the Sec. 163(j) limitation.