I.R.C. Section 163(j) Earnings-Stripping Rules and Guarantees Checklist

Summary

This checklist provides best practices in understanding the Internal Revenue Code (I.R.C.) Section 163(j) earnings-stripping rules as they pertain to guarantee payments. You should understand the steps involved in ascertaining whether a guaranteed payment is characterized as interest under I.R.C. Section 163(j), and current guidance through the second set of Final Regulations released by Treasury and the Internal Revenue Service on January 5, 2020 which indicates that guaranteed payments are interest. T.D. 9943. This checklist explores how to navigate those regulations while fully understanding the tax implication of guaranteed payments, interest, and disallowed interest.