We provide here a written summary of answers provided by the Department of Revenue to the committee at periodic question and answer sessions. These documents are classified as Revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on a specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.

Q&A with the Pennsylvania Department of Revenue

For taxpayers with both inter-company interest and third-party interest, what is the Department of Revenue's position on the ordering of interest limitations under IRC §163(j)?

Nov 14, 2019
It is not understood what is meant by "the ordering of interest limitations." There is no
difference in treatment of inter-company interest or third-party interest under IRC §163(j) when calculating federal taxable income as returned to the Federal Government on a separate return basis.

Taxpayers will need to continue to include inter-company and third-party interest in their calculation of interest expense under section 163 of the IRC as well as when calculating the limitation imposed by IRC 163(j) for purposes of their separate company federal taxable income. Upon the issuance of regulations by the IRS, the Department may provide additional guidance as necessary.
 

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Disclaimer

These documents provide a summary of the answers provided by the Department of Revenue to the PICPA Committee on State Taxation at its annual question and answer session. These documents are classified as revenue information issued for informational purposes only for the convenience of PICPA members. Pursuant to 61 Pa. Code Section 3.4, these documents should not be relied upon for any purpose or used in tax appeals. Taxpayers requiring a binding opinion on their specific fact situation may request a written letter ruling under 61 Pa. Code Section 3.3.