Question

What is 163 (I)? Please provide the definition of the 163(J) and also use your own language to explain 163(J).

Answer 1

163 (I)

In 1997 Congress had acted for this rule because this was concerned that corporation could issue debt in higher price from the market price as an equity. The act was not expected to affect debt with a conversion feature where the conversion price is significantly higher than the market price of the stock on the debt's issue date.

163 (J)

Generally taxpayers can deduct interest expense paid or accrued in the taxable year. UNDER 163 (J) the amount of deductible business interest expenses in a taxable year cannot be exceed the sum of.

Explain 163 (J)

Under 163 (J) it is have two rule one is Old another is New here is the below description,

Old 163 (J) :- It is limited interest deductions by prescribing certain rules to prevent parties from escaping U.S. taxation as well as encouraging taxpayers to maintain a debt to equity ratio.

New 163 (J):- It is effective from 1st January 2018. As per the old law of 163 (J) limited only to domestic affiliations but now the new rule said it was applies to all business whether it is domestic or multinational with certain exceptions like it does not apply on small business exemption or to certain trade or business that are eligible and choose to elect out.