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Bob Gordon Quoted in Tax Notes article: Interest Deduction Reg Pieces Evolving, Timing Uncertain

By: True Partners Consulting Staff |

Emily Foster of Tax Notes recapped the May 12 Corporate Tax session of the American Bar Association Section of Taxation meeting in Washington. An excerpt of the article, quoting Bob Gordon, is below. 

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A much-debated question addressed was whether the section 163(j) business interest deduction limitation applies to controlled foreign corporations.

Robert M. Gordon of True Partners Consulting pointed to the old section 163(j) regulations that seem to indicate that the statute didn’t apply to a CFC if it didn’t have effectively connected income. He also noted that section 952 regulations provide that a CFC calculates taxable income using U.S. tax principles, “which people have consistently interpreted as meaning that it is a U.S. taxpayer.” However, Gordon suggested that a CFC isn’t really a U.S. taxpayer because it doesn’t pay U.S. taxes, making it unclear whether section 163(j) applies to CFCs at all.

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