As the joys of tax season approaches, the IRS released a Proposed Notice of Rule Making regarding the proposed interest expense regulations (163(j)) for business, which could potentially affect your tax liability.
Prior to tax reform, businesses could write off interest and depreciation they accrued, which would shrink their tax liability by an equal amount of interest. After tax reform, and from now until 2021, a formula was implemented to determine the amount that businesses can deduct. The amount cannot be more than 30% of earnings before interest, taxes, depreciation and amortization. This also is known as, EBITDA, in the tax world.