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Daniel J. Malpezzi, left, and Timothy J. Horstmann, right, of McNees Wallace & Nurick. Daniel J. Malpezzi, left, and Timothy J. Horstmann, right, of McNees Wallace & Nurick.

On Dec. 20, 2017, Congress passed the Tax Cuts and Jobs Act (TCJA), the purpose of which was to stimulate economic growth through a major overhaul of the Internal Revenue Code. The legislation was signed by President  Donald Trump on Dec. 22, 2017, and many key provisions of the law went into effect on Jan. 1. One such provision that recently went into effect is a reduction in the federal corporate income tax rate, from 35 percent to 21 percent. We anticipate that this reduction in the federal corporate income tax rate will trigger requests to increase the interest rates charged by financial institutions for current outstanding loans. An increase in the interest rate could be triggered under a number of provisions in loan documents, and presents unique problems for conduit borrowers, such as 501(c)(3) tax-exempt organizations, and lenders under tax-exempt bank loan structures.

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