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Section 163(j) and Form 8990

Form 8990

The section 163(j) business interest expense deduction and carryover amounts report on Form 8990. The form calculates the section 163(j) limitation on business interest expense in coordination with other limits.
Form 8990 prints if the average annual net receipts from the last 3 years is more than $29 million or if the corporation is a tax shelter. If this year is the initial year of the corporation, and net receipts are more than $29 million, enter
X
 in the
Initial year corporation and net receipts are over $29 million
 field in the 8990 screen.
Form 8990 also prints if you received excess business interest expense from a partnership, which you'll find on the 1065 Schedule K-1, line 13K.

Business interest income

Business interest income is one of the factors in determining the amount of allowable business interest expense.
The
Interest income
 fields on the Inc and K screens are presumed to be portfolio income, which isn't the same as business interest income. You'll need to enter the corporation’s business interest income in the 8990 screen to calculate the allowable business interest expense.

Business interest expense

Enter business interest expense, not including floor plan financing interest, in
Business interest expense subject to limitation
 on the Inc, F-2, 4835-2, and/or Rent screens. UltraTax CS adds the amounts you have in those fields and transfers the total to Form 8990, line 1.
Enter 0 in
Business interest expense subject to limitation
 if the corporation has a disallowed business interest expense on the NOL screen in the Carryovers folder, and no current year interest expense.

Disallowed interest expense

The interest expense limitation calculates at the consolidated level, so the return may be out of balance if you prepare Schedule M-3 in the consolidated return. Based on the Schedule M-3 instructions, report an adjustment made at the consolidated level that isn't attributable to any specific member on the consolidated Schedule M-3 and the eliminations client Schedule M-3.

This article applies to:

  • Product: UltraTax CS
  • Return type: 1120 Corporation
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