Reg. § 1.267A-1 Disallowance of certain interest and royalty deductions.
(a) Scope This section and through provide rules regarding when a deduction for any interest or royalty paid or accrued is disallowed under section . describes hybrid and branch arrangements. provides rules for determining income inclusions and provides that certain amounts are not amounts for which a deduction is disallowed. provides an imported mismatch rule. sets forth definitions and special rules that apply for purposes of section . illustrates the application of section through examples. provides applicability dates.
(b) Disallowance of deduction This sets forth the exclusive circumstances in which a deduction is disallowed under section . Except as provided in of this section, a specified party's deduction for any interest or royalty paid or accrued (the amount paid or accrued with respect to the specified party, a specified payment) is disallowed under section to the extent that the specified payment is described in this . See also (treating structured payments as interest paid or accrued for purposes of section and the regulations in this part under section ). A specified payment is described in this to the extent that it is—
(1) A disqualified hybrid amount, as described in (hybrid and branch arrangements);
(2) A disqualified imported mismatch amount, as described in (payments offset by a hybrid deduction); or
(3) A specified payment for which the requirements of the anti-avoidance rule of are satisfied.
(c) De minimis exception of this section does not apply to a specified party for a taxable year in which the sum of the specified party's specified payments that but for this would be described in of this section is less than $50,000. For purposes of this , specified parties that are related (within the meaning of ) are treated as a single specified party.
[T.D. 9896, 85 FR 19836, Apr. 8, 2020]