Interest and Other Financial Costs

Allowable or Unallowable?

Generally unallowable, but interest assessed by state or local taxing authorities may be allowable. See overview

Overview

Interest on borrowings (however represented), bond discounts, costs of financing and refinancing capital (net worth plus long-term liabilities), legal and professional fees paid in connection with preparing prospectuses, and costs of preparing and issuing stock rights are unallowable (but see 31.205-28). However, interest assessed by State or local taxing authorities under the conditions specified in 31.205-41(a)(3) is allowable.