State, local tax implications of proposed regulations under section 385

U.S. SALT implications of proposed regulations

Proposed regulations under section 385 generally would treat related-party debt as equity unless the debt would facilitate new net investment in the borrower’s operations. If finalized, the proposed regulations would trigger uncertainty in the realm of U.S. federal income taxation.

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This report focuses on the parallel universe of state and local taxation, and highlights some factors to consider when determining whether aspects of the proposed regulations would apply independently at the state level. 


Read a June 2016 report [PDF 130 KB] prepared by KPMG LLP: What’s News in Tax: Heading Down the Rabbit Hole: SALT Implications of the Proposed Section 385 Regulations

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