Long-Term Borrowing

Nov 21, 2013

Are you considering long-term corporate borrowings later in 2013 or 2014? If so, you might want to close on the financing before legislation could be introduced that would potentially reduce corporate interest expense, allowing you to benefit from any possible grandfathering of the interest expense deduction.

In order to affect “revenue neutral” corporate tax reform, as called for by both the President and the House Ways and Means Chairman, the highest marginal corporate tax rate of 35% would be reduced and some corporate tax expenditures may be reduced or eliminated. Interest expense is one of the leading corporate tax deductions. If revenue neutral corporate tax reform is enacted, corporate interest deductions may be reduced.

Historically, the tax treatment of taxpayers who have already incurred expenses, has been grandfathered by Congress and those expenses have been allowed. Therefore, if you are considering long-term borrowing, sooner may be better than later in order take advantage of current tax benefits.

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