The transition from the use of interbank offer rates (IBORs) to other reference rates has been years in the making. Recently, the IRS issued final regs that provide the replacement rate for the IBOR. The replacement rate may be used by taxpayers to determine the amount of interest expense attributable to their excess U.S.-connected liabilities and allocable to income that’s effectively connected (commonly referenced as ECI) with the conduct of a trade or business within the United States. Generally, when a foreign person engages in business in the United States, income from sources within the U.S. connected with the conduct of that business is considered ECI. Contact us for details.
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