Common use of Exception to domestic use limita Clause in Contracts

Exception to domestic use limita. tion—no possibility of foreign use because items are not deducted or capitalized under foreign law. (i) Facts. P owns DE1X which, in turn, owns FSX. In year 1, the sole item of income, gain, deduction, and loss attributable to P’s interest in DE1X, as provided under § 1.1503(d)–5, is $100x of interest expense paid on a loan to an unrelated lender. For Coun- try X tax purposes, the $100x interest ex- pense attributable to P’s interest in DE1X in year 1 is treated as a repayment of principal and therefore cannot be deducted (at any time) or capitalized.

Exception to domestic use limita. tion—no possibility of foreign use because items are not deducted or capitalized under foreign lawla . (i) Facts. P owns DE1X which, in turn, owns FSX. In year 1, the sole item of income, gain, deduction, and loss attributable to P’s interest in DE1X, as provided under § 1.1503(d)–5, is $100x of interest expense paid on a loan to an unrelated lender. For Coun- try X tax purposes, the $100x interest ex- pense attributable to P’s interest in DE1X in year 1 is treated as a repayment of principal and therefore cannot be deducted (at any time) or capitalized.