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Section 163(j) and Form 8990

Exceptions for filing Form 8990

A corporation doesn't have to file Form 8990 in the following scenarios:

Excepted trade or business

If the taxpayer’s only interest expense is from an excepted trade or business and makes the Section 1.163(j)-9 election, the taxpayer doesn't need to file Form 8990.  For information on what types of trades or business are excepted, and not required to file Form 8990, see the Form 8990 instructions.
f the taxpayer made the election in a previous year or is making it this year, enter
X
 in
Section 1.163(j)-9 election made for an excepted trade or business
. This field is available on the 1120, Farm, Farm Rent, and Rent screens.
If this is the first year making the election, also enter data in the
Section 1.163(j)-9 election
 statement window in the Elect screen in the Elections folder. The section 163(j) election is an irrevocable election. If the corporation elected it in the prior year, you don't need to elect it again.

Small business taxpayer

If the corporation meets the conditions for a small business taxpayer and doesn't receive a 1065 Schedule K-1 with code 13K (Excess business interest expense), the corporation doesn't need to file Form 8990. The interest expense is allowed as a deduction in full.
If a small business taxpayer gets excess business interest expense from a partnership, they need to file Form 8990, and the business interest expense could be limited.
Conditions:
A small business taxpayer is not a tax shelter, and has average annual net receipts from the prior three years totaling less than $29 million.
To indicate this in UltraTax CS:
  • Enter the corporation’s prior net receipts in the
    Corporation’s net receipts
     fields in the 8990 screen. If the tax year was a short year, enter the number of months in the
    Months in the short year
     field.
  • If the corporation is a member of a controlled group, enter the annualized amounts of gross receipts, less returns and allowances, from all members of the controlled group in the
    Related entities net receipts
     fields. You'll need to aggregate the net receipts for members of a group of businesses under common control. Refer to Form 8990 instructions for other examples where you need to aggregate gross receipts for the gross receipts test

This article applies to:

  • Product: UltraTax CS
  • Return type: 1120 Corporation
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