Disallowed interest expenses due to these rules can be indefinitely carried forward.
In general, the limitation disallows any net interest expense that is in excess of 30% of a taxpayer’s adjusted taxable income (“ATI”).
It is effective for tax years beginning after December 31, 2017, with additional limitations introduced for years beginning after December 31, 2021. The new limitation applies to all businesses with net business interest expense, regardless of form of business (partnership, corporation, sole proprietor, etc.).
#IRC 163 CODE#
In summary, as part of the Tax Cuts and Jobs Act, Congress amended Internal Revenue Code Section 163(j), to add a new limitation on deduction of interest expense incurred in a trade or business. BNN previously described the topic in this article published shortly after the limitation was created. Some background on the limitation may be useful. However, as research has been conducted and regulations released, the impact of this regulation has found its way to financial institutions, although to what degree is highly situation and fact dependent. One industry that remained less concerned than others with these new limitations was financial institutions, which typically have more interest income than interest expense, which in many cases prevents the limitations from applying. The dreaded section 163(j) interest expense limitation and its complexities have haunted CPAs and businesses since the day tax reform was written.
0 kommentar(er)
