The passage of the 2025 Corporate Tax Reform Act introduces several major structural changes that transactional attorneys and private equity firms must immediately incorporate into their due diligence and deal structuring processes.
Impact on Capital Gains and Deductions
The most immediate change relates to the treatment of certain carried interest and the reduction of deductibility limits for interest expenses. This will inevitably shift how buyers value targets and how sellers negotiate their preferred deal structure (stock vs. asset sale).
"The legislative changes reward strategic, long-term investments while adding complexity to highly leveraged short-term deals."
Compliance and Documentation Requirements
New disclosure requirements demand enhanced transparency regarding foreign holdings and related-party transactions. Our team is advising clients to start preparing compliance documentation 60 days earlier than previous cycles to avoid closing delays.
- Review new limits on interest deductibility.
- Update disclosure schedules for increased scrutiny.
- Re-evaluate current holding company structures.
If your organization is currently involved in a transaction or planning an M&A move within the next 18 months, **proactive legal counsel is essential** to mitigate unexpected tax liabilities.
