Note Sale: Does It Accelerate Related-Party Interest Deductions?

摘要

An accrual-basis taxpayer normally takes deductions for expenses in the year the item accrues. But when the expense accrued by the taxpayer is owed to a related party who uses the cash basis of accounting, IRC section 267(a)(2) delays the deduction for the accrual-basis taxpayer to the year in which the related party includes the amount in gross income, the year of payment. Related parties include certain family members, such as spouses, children, parents and siblings, as well as individuals and corporations in which an individual owns directly or indirectly more than 50% of the stock.