Section 163 J

1 30 of the taxpayer s adjusted taxable income ati for that year 2 its business interest income and 3 floor plan financing interest.

Section 163 j. The newly enacted version of section 163 j limits deductions for business interest expense. Finalization of regulations proposed by treasury in late 2018 had been expected in early 2020 but with the enactment of the cares act the scope and timing of the section 163 j rules were revised. Section 163 j was significantly altered and its applicability was greatly expanded by the tax cuts and jobs act.

In the case of any demand loan or other loan without a fixed term which was outstanding on july 10 1989 interest on such loan to the extent attributable to periods before september 1 1989 shall not be treated as disqualified interest for purposes of section 163 j of the internal revenue code of 1986 as added by subsection a. To the extent a partnership s business interest deduction is limited the deferred business interest excess business interest expense must be allocated to the partners which reduces the partners bases in their partnership interests. The section 163 j limitation is applied at the partnership level.

As provided in q a 1 the amount of deductible business interest expense in a taxable year cannot exceed the sum of the partnership s business interest income 30 of the partnership s ati and the partnership s floor plan financing interest expense. The notice describes certain aspects of the regulations that treasury intends to issue. For purposes of section 163 j a taxpayer with an ownership interest in a partnership or s corporation must include a share of the partnership s or s corporation s gross receipts in proportion to the partner s distributive share or s corporation s pro rata share of gross income unless the partner and partnership or s corporation shareholder and s corporation are treated as a single person.

31 2017 to the sum of a taxpayer s business interest income floor plan financing interest and 30 of its adjusted taxable income ati for a given taxable year. Interest expense limitation rules under section 163 j section 163 j was substantially amended by the tax cuts and jobs act to limit the deduction of business interest for tax years beginning after dec. Section 163 j is applied to partnership business indebtedness at the partnership level.

Section 163 j generally may apply to any taxpayer. 1 it generally limits a taxpayer s business interest deductions for a taxable year to the sum of.