8990 ohjetta
Muoto 8990, Limitation on Business Interest Expense under Section 163(j)
Joulukuu 2022
Liittyvät lomakkeet
- Muoto 8990 - Liiketoiminnan edun rajoittaminen osan 163(j) mukaisesti
Department of the Treasury
Internal Revenue Service
Instructions for Form 8990
Limitation on Business Interest Expense Under Section 163(j)
(Rev. December 2022)
Section references are to the Internal Revenue
Code unless otherwise noted.
provide certain information so that the
partner or shareholder can complete their
return. See Ownership of pass-through
limitation, later.
Who Must File
A taxpayer (including, for example, an
individual, corporation, partnership, S
corporation) with business interest
Future Developments
expense; a disallowed business interest
expense carryforward; or current year or
prior year excess business interest
expense must generally file Form 8990,
unless an exclusion from filing applies.
For the latest information about
developments related to Form 8990 and
its instructions, such as legislation
enacted after they were published, go to
Coordination With Other
Limitations
Categorization and allocation of inter-
est expense. Current year interest
expense must be categorized under
Temporary Regulations section 1.163-8T
(for example, as investment interest,
personal interest, or business interest)
before computing the section 163(j)
limitation on the deduction for business
interest expense. Also, see Proposed
Regulations section 1.163-14 ((85 FR
56846) (2020 Proposed Regulations) for
rules on allocating interest expense
associated with debt proceeds for
pass-through entities. Only business
interest expense is subject to the section
163(j) limitation.
For purposes of the section 163(j)
limitation only, business interest expense
refers to interest expense properly
allocable to trades or businesses that are
not excepted trades or businesses. See
for allocating interest expense between
excepted and non-excepted trades or
businesses before computing the section
163(j) limitation.
A pass-through entity allocating excess
taxable income or excess business
interest income to its owners must file
Form 8990, regardless of whether it has
any interest expense.
What’s New
Change in adjusted taxable income
(ATI) computation. For tax years
beginning after 2021, the computation for
ATI is computed with the deductions for
depreciation, amortization, and depletion.
Do not add back the deductions for
depreciation, amortization, or depletion
attributable to a trade or business.
A regulated investment company that
pays section 163(j) interest dividends (see
Regulations sections 1.163(j)-1(b)(22)(iii)
(F) and 1.163(j)-1(b)(35)) must file Form
8990.
New worksheet. A new worksheet has
been added to the instructions. Worksheet
C is used to determine eligibility for the
safe-harbor election under Regulations
section 1.163(j)-7(h). See Worksheet
Group Safe Harbor Election, later.
A taxpayer that is a U.S. shareholder of
an applicable controlled foreign
corporation (CFC) that has business
interest expense, disallowed business
interest expense carryforward, or is part of
a CFC group must generally apply section
163(j) to the applicable CFC and attach a
Form 8990 with each Form 5471. See
Regulations section 1.163(j)-7(b).
General Instructions
For a CFC group, an additional Form
8990 must be filed for the CFC group to
report the combined limitations of all CFC
group members. See Specified Group
Parent, later.
Purpose of Form
Use Form 8990 to figure the amount of
business interest expense you can deduct
and the amount to carry forward to the
next year. For more information, see
Regulations sections 1.163(j)-1 through
1.163(j)-11.
If a safe-harbor election is made for a
CFC group, Form 8990 does not need to
be filed for each CFC group member, but
Form 8990 must be filed for the CFC
group.
Interest expense limitations. An
expense that has been disallowed,
deferred, or capitalized in the current tax
year, or which has not yet been accrued,
is not taken into account for section 163(j)
purposes. Section 163(j) applies after any
basis limitation and before the operation of
the at-risk, passive activity loss, or excess
business loss limitations. See Regulations
section 1.163(j)-3 for additional
Computation of section 163(j) limita-
tion. If section 163(j) applies to you, the
business interest expense deduction
allowed for the tax year is limited to the
sum of:
Exclusions from filing. A taxpayer is not
required to file Form 8990 if the taxpayer
have excess business interest expense
from a partnership. A taxpayer is also not
required to file Form 8990 if it only has
interest expense from one or more of
these excepted trades or businesses:
information on interactions of section
163(j) with other code provisions relating
to interest expense.
The trade or business of providing
•
If a taxpayer’s deduction for business
interest expense is limited under section
163(j) and such taxpayer has more than
one business activity for purposes of
either the at-risk (section 465) or passive
activity loss (section 469) limitation
services as an employee,
Carryforward of disallowed business
interest. The amount of any business
interest expense that is not allowed as a
deduction under section 163(j) for the tax
year is carried forward to the following
year as a disallowed business interest
expense carryforward. However, see
Special Rules for partnership treatment of
disallowed business interest expense,
later.
•
•
•
If a pass-through entity is not required
provisions, then the section 163(j)
limitation will apply to the overall business
interest expense from all the business
activities of the taxpayer. The proportion of
each activity’s business interest expense
that is disallowed is the same proportion
to file Form 8990 because it is a small
business taxpayer, but a partner or
shareholder is required to file Form 8990,
the pass-through entity is required, upon
request by the partner or shareholder, to
Jan 23, 2023
Cat. No. 71420E
as the disallowed business interest
expense over the total business interest
expense. See Regulations section
1.163(j)-3(c) example 4 and Temporary
Regulations section 1.163-8T.
receipts, in proportion to the partner’s
distributive share of items of gross income
or S corporation’s shareholder’s pro rata
share of gross receipts, unless the partner
and partnership, or S corporation
Also see FAQs Regarding the
Aggregation Rules at IRS.gov.
Tax shelter election. A taxpayer that is a
tax shelter as defined in section 448(d)(3)
is not permitted to use the small business
exemptions contained in section 163(j)(3).
Under section 448(d)(3), a taxpayer that is
a “syndicate” is considered to be a tax
shelter. To determine whether a taxpayer
is a syndicate, the section 448 regulations
permit a taxpayer to make an annual
election to use its allocations of income,
gain, loss, or deduction made in the
immediately preceding tax year, instead of
using its current year allocations. The
election is made on a timely filed original
return (including extensions) for the tax
year for which it is made. It is only valid for
that tax year and once made cannot be
revoked. See Regulations section
shareholder and S corporation, are treated
as a single person. In that case, see Gross
affiliated group, later.
The gross receipts of an organization
subject to tax under section 511 only
include gross receipts taken into account
in determining its unrelated business
taxable income.
Partner basis limitations. Deductible
business interest expense and excess
business interest expense are subject to
section 704(d) loss limitation rules. See
Regulations section 1.163(j)-6(h)(1) and
(2).
Definitions
The definitions below are only for the
purposes of applying section 163(j).
Small business taxpayer. A small
business taxpayer is not subject to the
section 163(j) limitation and is generally
not required to file Form 8990.
A small business taxpayer is a taxpayer
that is not a tax shelter (as defined in
section 448(d)(3)) and meets the gross
receipts test, described below. A tax
shelter is defined as:
Note. Gross receipts must meet the
definition under section 448(c) and
Temporary Regulations section
1.448-1T(f)(2)(iv).
1.448-2(b)(2)(iii)(B)(2) for guidance on the
time and manner of making the annual
election.
Any reference to your business gross
receipts also includes a reference to the
gross receipts of any predecessor of your
business. If your business was not in
existence for the entire 3-year period,
base your average annual gross receipts
on the period your business existed. Also,
if your business had a tax year of less than
12 months, your gross receipts must be
annualized by multiplying the gross
receipts for the short period by 12 and
dividing the result by the number of
months in the short period.
Excepted trade or business. A trade or
business does not include:
Any enterprise other than a C
•
Performing services as an employee,
•
corporation offering ownership via
registered securities,
•
Any syndicate within the meaning of
•
•
section 1256(e)(3)(B) (see Regulations
section 1.163(j)-2(d)(3)), or
How to make an election and the effect
•
Any entity described in section 6662(d)
•
of being an excepted trade or business
(2)(C)(ii).
A pass-through entity that is a small
The prior period gross receipts must be Electing real property trade or busi-
business taxpayer does not allocate
excess taxable income, excess business
interest income, or excess business
interest to its owners.
annualized for any short period before
dividing by 3.
ness. A real property trade or business
engaged in activities described in section
469(c)(7) may elect to not be subject to
the section 163(j) limitation. See Elections
making an election. Real property trade or
business means any real property
development, redevelopment,
For assistance in preparing the
average annual gross receipts, see the
Worksheet Per Section 448(c), later.
Gross receipts test. A taxpayer meets
the gross receipts test if the taxpayer has
average annual gross receipts of $27
million or less for the 3 prior tax years.
A taxpayer's average annual gross
receipts for the 3 prior tax years is
determined by:
Gross receipts aggregation for
members of a controlled group,
construction, reconstruction, acquisition,
conversion, rental, operation,
businesses under common control, or
members of an affiliated group. For
section 163(j), gross receipts may include
the receipts of more than one taxpayer.
For this purpose, all members of a
management, leasing, or brokerage trade
or business.
1. Adding the gross receipts for the 3
prior tax years, and
Electing farming business. Farming
businesses (as defined in section 263A(e)
(4)) and specified agricultural and
2. Dividing the total by 3.
controlled group of corporations (as
defined in section 52(a)), and all members
of a group of businesses under common
control (as defined in section 52(b)), are
treated as a single person; and all
In the case of any taxpayer, which is
not a corporation or a partnership, and
except as provided below, the gross
receipts test is applied in the same
manner as if such taxpayer were a
corporation or a partnership.
horticultural cooperatives (as defined in
section 199A(g)(4)) may elect to not be
subject to the section 163(j) limitation. See
the effect of making an election. A farming
business includes livestock, dairy, poultry,
fish, fruit, nut, and truck farms. It also
includes plantations, ranches, ranges, and
orchards. A fish farm is an area where fish
and other marine animals are grown or
raised and artificially fed, protected, etc.,
but it does not include an area where they
are merely caught or harvested. A plant
nursery is a farm for purposes of
members of an affiliated service group (as
defined in sections 414(m) and (o)) shall
be treated as a single person. If you and a
partnership or S corporation in which you
hold an interest are treated as a single
person for purposes of the gross receipts
test, aggregate the partnership’s or S
corporation’s gross receipts with your
gross receipts. Do not duplicate amounts
by also including a share of partnership or
S corporation gross receipts as your own
gross receipts.
Gross receipts for any tax year must be
reduced by returns and allowances made
during the year. For individuals and for
section 163(j) only, gross receipts do not
include inherently personal amounts such
as disability benefits, social security
benefits, and wages received as an
employee and reported on Form W-2.
deducting soil and water conservation
For 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
expenses.
For more information, see Average
Section 448(c), later.
A specified agricultural or horticultural
cooperative is a cooperative to which Part
-2-
I of subchapter T of the Internal Revenue
Code applies that manufactures,
produces, grows, or extracts any
agricultural or horticultural product, or has
marketed agricultural or horticultural
products.
Business interest income does not include interest, such as sections 263A and 267,
investment income.
as well as basis, at-risk and passive
activity loss limitations.
expense and income, later.
Any additions or subtractions from
taxable income in arriving at ATI
Interest income that is allocable to an
excepted trade or business is not treated
as business interest income.
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CAUTION
are limited to the amount by which
Certain regulated utility businesses.
Certain regulated utility trades or
the item affects taxable income.
Business interest expense. Business
interest expense means any interest paid
or accrued that is properly allocable to a
trade or business. Business interest
expense, generally, does not include
investment interest or other personal
interest. See Temporary Regulations
section 1.163-9T for a definition of
personal interest. However, see C
income, later.
Applicable percentage. The applicable
percentage is the percentage applied to
ATI for purposes of computing the
business interest expense limitation
calculation. The applicable percentage is
30% (30% ATI limitation).
businesses are not subject to the section
163(j) limitation. No election is required for
certain regulated utility businesses,
meaning these trades or businesses are
automatically excepted from the limitation.
Automatically excepted regulated
utilities are trades or businesses that
furnish or sell:
Floor plan financing interest expense.
Floor plan financing interest expense is
not subject to the section 163(j) limitation.
Floor plan financing interest expense is
interest on debt used to finance the
acquisition of motor vehicles held for sale
or lease where the debt is secured by the
acquired inventory.
Electrical energy, water, or sewage
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disposal services;
Gas or steam through a local
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Interest expense that is allocable to an
excepted trade or business is not treated
as business interest expense.
distribution system; or
Transportation of gas or steam by
•
pipeline.
To be an automatically excepted
Excess business interest expense. If a
partnership has a limitation on business
interest expense, the disallowed business
interest expense is not carried over by the
partnership, but is allocated to the
Excess taxable income. In general,
excess taxable income is the amount of a
partnership’s or S corporation’s ATI that is
in excess of the amount of ATI required to
support the partnership’s or S
regulated utility trade or business, the
rates for furnishing or sale of the above
listed items must be established or
approved by a state or political subdivision
thereof, by any agency or instrumentality
of the United States, by a public service or
public utility commission or other similar
body of any state or political subdivision
thereof, on a rate of return and cost of
service basis, or by the governing or
rate-making body of an electric
partners. This interest is referred to as
excess business interest expense.
corporation’s business interest expense
deduction. This amount is computed by a
partnership or an S corporation and is
allocated to the partner or shareholder.
This amount is used by the partner or
shareholder in determining their current
year ATI.
Tentative taxable income Tentative
taxable income is generally the same as
taxable income under section 63.
However, tentative taxable income is
computed as if the section 163(j) limitation
does not exist; therefore, do not include
disallowed business interest expense
carryforwards from a prior year or excess
business interest expense from a prior
year.
cooperative.
Excess business interest income.
Excess business interest income is the
amount by which current year business
interest income exceeds current year
business interest expense (excluding floor
plan financing). This amount is computed
by a partnership or an S corporation and is
allocated to the partner or shareholder.
This amount is used by the partner or
shareholder in determining their current
year business interest income.
If the trade or business does not qualify
as an automatically excepted regulated
utility trade or business because its rates
are not established or approved on a cost
of service and rate of return basis, the
taxpayer may be able to elect that the
trade or business be an excepted trade or
business. See Regulations section
See Regulations section 1.163(j)-1(b)
(43) for more information.
Adjusted taxable income (ATI). ATI
means tentative taxable income of the
taxpayer computed without regard to:
1.163(j)-1(b)(15)(iii)(A) regarding electing
utility trades or businesses. Also, see
the effect of making an election.
Any item of income, gain, deduction, or
•
loss, which is not properly allocable to a
trade or business (within the meaning of
section 162);
Special Rules
Interest. In general, interest is any
amount that is paid, received, or accrued
as compensation for the use or
Elections. A taxpayer engaged in a real
property trade or business, a farming
business, or a non-automatically excepted
regulated utility trade or business may
elect not to limit business interest expense
under section 163(j) for such trade or
business. This is an irrevocable election.
Any business interest income or
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business interest expense;
The amount of any net operating loss
forbearance of money or that is treated as
interest under the Internal Revenue Code
or the regulations thereunder.
•
deduction under section 172;
The amount of any qualified business
•
income allowed under section 199A (for
purposes of determining ATI the section
199A deduction is determined without
regard to section 163(j). See Regulations
section 1.163(j)-1(b)(43));
Regulations section 1.163(j)-1(b)(22)
provides additional guidance on what
constitutes interest for purposes of section
163(j), including anti-avoidance rules and
a list of other amounts treated as interest,
such as certain amounts of bond premium,
factoring income, and section 163(j)
interest dividends from regulated
If the real property trade or business or
farming business election is in effect, you
are required to use the alternative
depreciation system (ADS) for certain
property. See Pub. 946, How To
For tax years beginning before 2022,
•
any deduction for depreciation,
amortization, or depletion attributable to a
trade or business; and
Depreciate Property. Also, you are not
entitled to the special depreciation
allowance for that property. For a taxpayer
with more than one qualifying business,
the election is made with respect to each
trade or business.
investment companies.
Adjustments described in published
•
Business interest income. Business
interest income means the amount of
interest income includible in the taxpayer’s
gross income for the tax year, which is
properly allocable to a trade or business.
guidance.
To determine ATI, tentative taxable
income is computed after applying other
sections limiting the deductibility of
-3-
1.163(j)-1(b)(15)(iii) (as an electing utility
trade or business), as applicable.
Electing real property trade or busi-
business must use the ADS for any
Self-charged interest. See Regulations
section 1.163(j)-6(n) for the treatment of
business interest income and business
interest expense with respect to lending
transactions between a partnership and a
partner.
Consolidated group’s trade or busi-
ness. Only the name and taxpayer
identification number (TIN) of the agent for
the group, as defined in Regulations
section 1.1502-77, must be provided on
the election statement.
nonresidential real property, residential
rental property, and qualified improvement
property used in its trade or business.
Revenue Procedure 2021-9. Revenue
Procedure 2021-9 provides a safe harbor
that allows a taxpayer engaged in a trade
or business that manages or operates a
residential living facility that provides
certain supplemental assistive, nursing,
and other routine medical services to treat
such trade or business as a real property
trade or business. See Revenue
Partner. A partner’s excess business
interest expense is treated as paid or
accrued by the partner in subsequent
years to the extent the partner is allocated
current year excess taxable income or
excess business interest income from the
same partnership.
If a partner not subject to the section
163(j) limitation has excess business
interest expense from a prior year and is
allocated excess taxable income or
excess business interest income in the
current year, the partner would file Form
8990 and the amount of excess business
interest expense treated as paid or
accrued in the current year would not be
subject to further limitation under section
163(j). See Schedule A, Summary of
later.
A partner subject to the section 163(j)
limitation will include the amount of excess
business interest expense treated as paid
or accrued in figuring its current year
business interest expense limitation.
If both a partnership and a partner are
subject to the section 163(j) limitation, the
partner’s current year business interest
expense limitation computation will
include the following amounts from each
of its partnerships:
Partnership’s trade or business. An
election for a partnership must be made
on the partnership’s return with respect to
any trade or business that the partnership
conducts. An election by a partnership
does not apply to a trade or business
conducted by a partner outside the
partnership.
Procedure 2021-9 for additional
information and requirements to qualify for
the safe harbor.
Taxpayers with both excepted and
non-excepted trades or businesses.
Taxpayers must allocate and apportion
their interest expense, interest income,
and other tax items between excepted and
non-excepted trades or businesses,
applying the rules under Regulations
section 1.163(j)-10. An asset basis
farming business must use the ADS for
any farming property the taxpayer owns
with a recovery period of 10 years or
more.
Regulated utility trade or business.
Automatically excepted utility trades or
businesses and electing utility trades or
businesses cannot claim the additional
first-year depreciation deduction under
section 168(k) for any property that is
primarily used in the excepted regulated
utility trade or business.
approach is generally used to allocate
interest expense and interest income.
Regulations section 1.163(j)-10(c)
requires a taxpayer to attach a statement
to its timely filed tax return, providing
information related to the asset basis and
allocation determination, as provided, in
Regulations section 1.163(j)-10(c)(6)(iii).
Safe harbor for real estate investment
trusts (REITs). Under certain
Partnerships. If a partnership is subject
to the section 163(j) limitation, the section
163(j) limitation is applied at the
circumstances, a REIT (and a partnership
controlled by one or more REITs) is
eligible to make an election to be a real
property trade or business. See
partnership level. If a partnership has
deductible business interest expense,
such deductible business interest expense
is not subject to any further limitation
under section 163(j) at the partner level.
For all other purposes of the Code,
however, deductible business interest
expense retains its character as business
interest expense at the partner level.
Current year excess taxable income,
Excess business interest expense
•
Regulations section 1.163(j)-9(h).
•
treated as paid or accrued, and
•
How to make the election. To make an
election for a real property, farming, or
non-automatically excepted regulated
utility trade or business, attach an election
statement to a timely filed original tax
return (including extensions). Once the
election is made, it is irrevocable.
Current year excess business interest
income.
These amounts will not include items
from an excepted trade or business.
If the partnership has a limitation on
business interest expense, the disallowed
business interest expense (excess
business interest expense) is not carried
over by the partnership, but is allocated to
the partners.
After completing Form 8990, the
partnership must determine how the
deductible business interest expense,
excess business interest expense, excess
taxable income, and excess business
interest income are allocated among the
partners. Worksheet A—Determination of
If a partner is subject to the section
163(j) limitation and the partnership is not,
later.
The statement must be titled “Section
1.163(j)-9 Election” (for real property or
farming businesses) or “Section
1.163(j)-1(b)(15)(iii) Election” (for an
electing utility trade or business), and
must contain the following information for
each electing trade or business:
In the event a partner sells a
partnership interest and the partnership in
which the interest is being sold owns only
non-excepted trade or business assets,
the gain or loss on the sale of the
partnership interest is included in the
partner’s ATI. If the partnership interest
consists of both excepted and
The taxpayer’s name;
•
•
•
The taxpayer’s address;
The taxpayer’s social security number
(SSN) or employer identification number
(EIN);
non-excepted assets, the partner may use
the method set forth in Regulations
section 1.163(j)-10(c) to determine the
amount properly allocable to a
A description of the taxpayer’s electing
•
trade or business, sufficient to
demonstrate qualification for an election,
including the principal business activity
code; and
Relevant Section 163(j) Items are to be
used to determine the amount of each
item allocable to each partner. See
Regulations section 1.163(j)-6(f)(2) for
additional information on the allocation.
non-excepted trade or business and,
therefore, properly includible in the
partner’s ATI.
A statement that the taxpayer is making
•
an election pursuant to section 163(j)(7)
(B) (as an electing real property trade or
business) or (C) (as an electing farming
business), or Regulations section
Excess business interest expense
from a prior tax year that was suspen-
ded under section 704(d) (“negative
-4-
section 163(j) expense”). See
expenses that a partnership pays,
activity and partners that do not materially
participate. Only the portion of the interest
expense that is allocable to the materially
participating partners is subject to
Regulations section 1.163(j)-6(h) for basis
receives, or accrues and allocates to a C
adjustment calculations and ordering rules corporation partner as a separately stated
for losses under section 704(d).
item is treated by the C corporation as
properly allocable to a trade or business of limitation under section 163(j) at the
Excess business interest expense in
tiered partnerships. See 2020
that partner. Similarly, for purposes of
section 163(j), any other tax items of a
partnership that are neither properly
allocable to a trade or business of the
partnership nor described in section
163(d) and that are allocated to a C
corporation partner as separately stated
items, are treated as properly allocable to
a trade or business of that partner. See
Regulations section 1.163(j)-4(b)(3)(i).
partnership level. In addition, the trading
partnership is required to bifurcate all of its
other items of income, gain, loss, and
deduction from its trading activity allocable
to the partners that do not materially
Proposed Regulations section 1.163(j)-6(j)
for treatment of excess business interest
expense in tiered partnerships.
S corporation. The section 163(j)
limitation is applied at the S corporation
level. Disallowed business interest
expense is carried over by the S
corporation and is treated as business
interest expense paid or accrued in the
following year.
participate. Such items are not taken into
account at the partnership level as items
from a trade or business for section 163(j),
but instead are treated as items from an
investment activity of the partnership.
Current year business interest expense
is deducted before disallowed business
interest expense carryforwards, which are
then deducted in the order of the year in
which they were incurred, starting with the
earliest year, subject to certain limitations.
Foreign persons with effectively con-
nected income (ECI). A nonresident
alien individual or foreign corporation that
is not a relevant foreign corporation and
that has ECI is also subject to the section
163(j) limitation. As foreign persons are
only taxed on their ECI, ATI, business
interest expense, business interest
For a shareholder subject to the section
163(j) limitation, the shareholder’s current
year section 163(j) limitation computation
will include the following amounts from
each of its S corporations:
Consolidated group. A consolidated
group has a single section 163(j)
Current year excess taxable income,
•
and
income, and floor plan financing interest
expense are modified to limit such
limitation. A consolidated group files one
Form 8990. For members entering or
leaving the group, see Regulations section
1.163(j)-5 for applicable limitations.
Current year excess business interest
•
income.
amounts to income which is ECI and
expenses properly allocable to ECI. A
relevant foreign corporation means any
foreign corporation whose classification is
relevant under Regulations section
These amounts will not include items
from an excepted trade or business.
Intercompany obligations. All
intercompany obligations, as defined in
Regulations section 1.1502-13(g)(2)(ii),
are disregarded for purposes of
determining a member’s business interest
expense and business interest income
and in figuring the consolidated group’s
ATI.
Ownership of pass-through entities
not subject to the section 163(j) limita-
tion. If you are subject to the section
163(j) limitation and are an owner of a
pass-through entity that is not subject to
the section 163(j) limitation, your share of
the pass-through business interest
expense is not subject to the section
163(j) limitation, and your share of
non-excepted trade or business items of
income, gain, loss, and deduction
(including business interest expense and
business interest income) of such
301.7701-3(d)(1) for a tax year, other than
solely pursuant to sections 881 or 882.
Before applying section 163(j), a
foreign corporation that has ECI must first
determine its business interest expense
allocable to ECI under Regulations section
1.882-5. Business interest expense
allocable to ECI is reported on Schedule I
(Form 1120-F). Disallowed business
interest expense carryforward, as
Tax-exempt corporations with unrela-
ted business income (UBI). The rule for
C corporation interest expense and
income applies to a corporation that is
subject to the unrelated business income
tax under section 511 only with respect to
that corporation’s items of income, gain,
deduction, or loss that are taken into
account in computing the corporation’s
unrelated business taxable income, as
defined in section 512.
determined under section 163(j), that was
allocable to ECI in a prior year but
pass-through entity, if net positive, is
included on line 13. You must request the
pass-through entity to separately state, in
sufficient detail, the items necessary to
include on line 13.
In the event a partnership allocates
excess business interest expense to one
or more of its partners, and in a later tax
year the partnership is an exempt entity,
the excess business interest expense
from the prior year is treated as business
interest expense paid or accrued by the
partner in the later year. See Regulations
section 1.163(j)-6(m)(3).
deductible in the current tax year and any
current year ECI business interest
expense that becomes disallowed
business interest expense carryforward,
after applying section 163(j), are also
included on Schedule I (Form 1120-F).
Regulated investment companies
(RICs) and real estate investment
trusts (REITs). For special rules for
determining ATI for RICs and REITs, see
Regulations section 1.163(j)-4(b)(4). For a
safe harbor for REITs (and partnerships
controlled by one or more REITs) making
an election to be an electing real property
trade or business, see Regulations section
1.163(j)-9(h).
Relevant foreign corporations. Section
163(j) generally applies to determine the
deductibility of a relevant foreign
corporation’s business interest expense
for purposes of computing its taxable
income (determined under Regulations
section 1.952-2 or the rules of section
882) in the same manner as it applies to
determine the deductibility of a domestic C
corporation’s business interest expense
for purposes of computing its taxable
income. An applicable CFC means a
foreign corporation described in section
957, but only if the foreign corporation has
at least one U.S. shareholder that owns
(within the meaning of section 958(a))
stock of the foreign corporation.
C corporation business interest ex-
pense and income. Solely for section
163(j), all interest paid or accrued (or
treated as paid or accrued) by a C
Trading partnerships. A trading
partnership is a partnership engaged in a
trade or business activity of trading
personal property (including marketable
securities) for the account of owners of
interests in the activity, as described in
Temporary Regulations section
corporation is business interest expense,
and all interest includible in gross income
by a C corporation is business interest
income, except to the extent such interest
expense or interest income is allocable to
an excepted trade or business.
1.469-1T(e)(6). A trading partnership is
required to bifurcate its interest expense
from a trading activity between partners
that materially participate in the trading
CFC group election. In order to make a
CFC group election under Regulations
section 1.163(j)-7(e), each designated
Any investment interest expense,
investment interest income, or investment
-5-
U.S. person (as defined in Regulations
section 1.163(j)-7(k)(12)) must attach the
election statement described in
Form 8990 must be filed for the CFC
group in order to report the combined
limitation of the CFC group. The CFC
group's Form 8990 must be filed by the
made. See Regulations section
1.163(j)-7(e)(5)(ii).
Specified group parent. A specified
group parent means a qualified U.S.
person or an applicable CFC. A qualified
U.S. person means a United States
person described in section 7701(a)(30)
(A) or (C). Members of a consolidated
group that file (or that are required to file) a
consolidated U.S. federal income tax
return are treated as a single qualified
U.S. person, and individuals described in
section 7701(a)(30)(A) whose filing status
is married filing jointly are treated as a
single qualified U.S. person.
Regulations section 1.163(j)-7(e)(5)(iv) to
the CFC group’s Form 8990 in the year the specified group parent, if the specified
CFC group election is made. The
group parent is a qualified U.S. person. If
the specified group parent is a CFC, the
U.S. shareholders that file Form 5471 for
the specified group parent must file the
CFC group's Form 8990 with Form 5471
of the specified group parent. In addition, if
a U.S. shareholder that files Form 5471 for
a CFC group member is not the specified
group parent and does not file Form 5471
for the specified group parent, the CFC
group's Form 8990 should be attached to
such U.S. shareholder's tax return.
statement must include the name and
taxpayer identification number of all
designated U.S. persons, a statement that
the CFC group election is being made, the
specified period (as defined in
Regulations section 1.163(j)-7(k)(29)) for
which the CFC group election is being
made, the name of each CFC group
member, and its specified tax year with
respect to the specified period. If a CFC
group election was previously revoked,
the statement must include a certification
that the specified period for which the
election is made did not begin before 60
months following the last day of the
specified period for which the election was
revoked. See Regulations section
1.163(j)-7(e)(5)(ii).
Designated U.S. person. With respect
to a specified group, a designated U.S.
person means either the specified group
parent (if the specified group parent is a
qualified U.S. person) or each controlling
domestic shareholder (see Regulations
section 1.964-1(c)(5)(i)) of the specified
group parent (if the specified group parent
is an applicable CFC). With respect to a
stand-alone applicable CFC, each
On the CFC group's Form 8990, line 1
through line 25 should be completed by
adding together the individual amounts
reported by each CFC group member on a
separate entity basis. However, for
purposes of determining ATI of a CFC
group, the limitation that ATI cannot be
less than zero applies with respect to the
If a CFC group election is in effect, a
single section 163(j) limitation is computed ATI of the CFC group but not the ATI of
controlling domestic shareholder of the
stand-alone applicable CFC is a
for a specified period of a CFC group. A
CFC group sums each of its CFC group
member’s separate-company applicable
amounts for a specified period. Items of a
CFC group member are translated into a
single currency (which may be the U.S.
dollar or the functional currency of a
plurality of the CFC group members) for
the CFC group and back to the functional
currency of the CFC group member using
the average exchange rate for the CFC
group member’s specified tax year (as
defined in Regulations section
any CFC group member. Line 26 through
line 31 of Form 8990 should be completed
by reference to the total amounts reported
on line 1 through line 25. Each designated
U.S. person should attach a statement
identifying the specified group parent, the
specified period, and the name and
specified tax year of each CFC group
member.
On the CFC group’s Form 8990, enter
“Specified Group Parent” as the name of
the foreign entity on line A. Enter zeros for
the foreign entity’s EIN number. Do not
complete Schedule A or Schedule B of the
CFC group's Form 8990.
Compliance with these instructions
satisfies the statement requirement under
Regulations section 1.163(j)-7(e)(5)(iv)
and the annual information reporting
requirement under Regulations section
1.163(j)-7(e)(6).
designated U.S. person.
Safe-harbor election. If a safe-harbor
election is in effect with respect to a tax
year of a stand-alone applicable CFC or a
specified tax year of a CFC group
member, then, for such year, no portion of
the applicable CFC's business interest
expense is disallowed under the section
163(j) limitation. See instructions to
Worksheet C, and complete Worksheet C
before completing Part I.
1.163(j)-7(k)(30)), using any reasonable
method, consistently applied. Only
If the safe-harbor election is made for a
stand-alone applicable CFC, the U.S.
shareholders that file Form 8990 for the
stand-alone applicable CFC must attach
Worksheet C to their tax return together
with the Form 8990 of the stand-alone
applicable CFC and complete Part I of the
stand-alone applicable CFC's Form 8990
in accordance with the instructions to
Worksheet C. Check the "Yes" box on line
D of the stand-alone applicable CFC's
Form 8990.
If the safe-harbor election is made for a
CFC group, the U.S. shareholders that file
the CFC group's Form 8990 must attach
Worksheet C to their tax return together
with the CFC group's Form 8990 and
complete Part I of the CFC group's Form
8990 in accordance with the instructions
to Worksheet C. Check the "Yes" box on
line D of the CFC group's Form 8990.
non-ECI amounts are included in the CFC
group calculation. A separate section
163(j) calculation and Form 8990 must be
filed for the ECI of a CFC group member, if
any. The CFC group member’s ECI
attributes are treated, for this purpose, as
attributes of a separate applicable CFC.
Revocation of CFC group election. In
order to revoke a CFC group election,
each designated U.S. person must attach
the statement described in Regulations
section 1.163(j)-7(e)(5)(iv) to the Form
8990 that is filed by or on behalf of the
specified group parent. The statement
must include the name and taxpayer
identification number of all designated
U.S. persons, a statement that the CFC
group election is being revoked, the name
of the specified group parent, the
Form 8990 for each CFC group mem-
ber. When a CFC group election is in
effect, the U.S. shareholders of each CFC
group member must file Form 8990 with
Form 5471 for each CFC group member
on a separate entity basis (unless a
safe-harbor election is in effect for the
CFC group). On each CFC group
member’s Form 8990, report the individual
CFC group member’s amounts on line 1
through line 25. Do not complete line 26
through line 29 and report the CFC group
member’s current-year business interest
expense deduction and disallowed
business interest expense (as determined
under Regulations section 1.163(j)-7(c)
(3)) on lines 30 and 31.
specified period for which the election is
revoked, and the name and specified tax
year of each specified group member. The
statement must also include a certification
that the specified period for which the
election is revoked did not begin before 60
months following the last day of the
A safe-harbor election is valid only if
made by each designated U.S. person.
The requirement to file the election
statement described in Regulations
section 1.163(j)-7(h)(5)(ii) is satisfied by
attaching Worksheet C in compliance with
these instructions.
Additional Form 8990 for CFC group.
In addition to the Form 8990 that is filed for
each CFC group member, a separate
specified period for which the election was
-6-
The safe-harbor election is available if
a CFC group’s (or stand-alone applicable
CFC’s) business interest expense is equal
to or less than either (a) its business
interest income or (b) 30% of the lesser of
(i) its qualified tentative taxable income
(QTTI) or (ii) its eligible amount. See
Regulations section 1.163(j)-7(h)(3). A
CFC group is not eligible for the
inclusion of an amount by a U.S.
Specific Instructions
shareholder (as defined in section 951(b))
in gross income under sections 78,
951(a), or 951A(a) with respect to an
applicable CFC that is properly allocable
to a non-excepted trade or business. A
specified deemed inclusion also includes
any amount included in a domestic
partnership’s gross income under sections
951(a) or 951A(a) with respect to an
applicable CFC to the extent such
amounts are attributable to investment
income of the partnership and are
allocated to a domestic C corporation that
is a direct (or indirect) partner and treated
as properly allocable to a non-excepted
trade or business of the domestic C
corporation.
If Form 8990 relates to an information
return for a foreign entity (for example,
Form 5471), provide the foreign entity
name and appropriate identification
number on line A.
If the foreign entity is a CFC group
member or if this Form 8990 is being filed
by or on behalf of the specified group
parent to report the combined limitation of
the CFC group, check the "Yes" box and
additional requirements when making a
CFC group election. One of those
additional requirements is that a separate
Form 8990 must be completed in order to
report the combined limitation of the CFC
group.
safe-harbor election if any CFC group
member has a pre-group disallowed
business interest expense carryforward.
See Regulations section 1.163(j)-7(k)(19)
for the specified period. See Regulations
section 1.163(j)-7(h)(2). See the
instructions for Worksheet C for additional
information.
The safe-harbor does not apply to
excess business interest expense, as
described in Regulations section
Section 1.163(j)-7(j) of the 2020
Proposed Regulations does, however,
allow a U.S. shareholder to add to its
tentative taxable income a portion of its
1.163(j)-6(f)(2), until the tax year in which
it is treated as paid or accrued by an
If a safe-harbor election is being made,
check the "Yes" box and see Safe-harbor
Safe Harbor Election, later, for additional
requirements when making a safe-harbor
election and special instructions for
completing Part I. If a safe-harbor election
is made, Schedules A and B should not be
completed.
applicable CFC under Regulations section specified deemed inclusions that are
1.163(j)-6(g)(2)(i). Excess business
interest expense is not taken into account
for purposes of this election until a tax
year in which it is treated as paid or
accrued by an applicable CFC under
Regulations section 1.163(j)-6(g)(2)(i).
See Regulations section 1.163(j)-7(h) for
full election rules.
attributable to either a stand-alone
applicable CFC or a CFC group member,
except to the extent attributable to an
inclusion under section 78 with respect to
an applicable CFC, provided the
applicable requirements are met. That
portion is equal to the ratio of the
applicable CFC’s CFC excess taxable
income over its ATI.
Part I—Computation of
Allowable Business
Interest Expense
Limitation on pre-group disallowed
business interest expense carryfor-
ward. The amount of the pre-group
disallowed business interest expense
carryforwards that may be included in any
CFC group member’s business interest
expense deduction for any specified tax
year may not exceed the aggregate
section 163(j) limitation for all specified
periods of the CFC group, determined by
reference only to the CFC group
Change in ATI computation. After
2021, ATI is computed with deductions for
depreciation, amortization, depletion, and
any other deduction prescribed in
published guidance. Do not add back the
deductions for depreciation, amortization,
or depletion attributable to a trade or
business after 2021.
Complete Part I to determine your
allowable business interest expense
deduction.
If you are a taxpayer that owns an
interest in a partnership subject to the
section 163(j) limitation, see the
instructions for Schedule A before
completing Part I.
Change from being subject to section
163(j) to being exempt from section
163(j) under the small business ex-
emption. A taxpayer that has disallowed
business interest expense from a prior
year and meets the small business
member’s items of income, gain,
deduction, and loss, and reduced
If you are a taxpayer that is a
shareholder in an S corporation subject to
the section 163(j) limitation, see the
instructions for Schedule B before
completing Part I.
(including below zero) by the CFC group
member’s business interest expense
(including disallowed business interest
expense carryforwards) taken into
exemption in the current year is no longer
required to limit their business interest
expense for section 163(j) purposes.
account as a deduction by the CFC group
member in all specified tax years in which
the CFC group member has continuously
been a CFC group member of the CFC
group (cumulative section 163(j)
If you are a regulated investment
company that paid section 163(j) interest
dividends and that has no business
interest expense for the tax year, complete
only Sections I and III.
Similarly, a partner with excess
business interest expense from a
partnership is not required to limit such
excess business interest expense under
section 163(j) if the partnership meets the
small business exemption in the current
year and the partner also meets the small
business exemption in the current year.
pre-group carryforward limitation). See
Regulations section 1.163(j)-7(c)(3)(iv).
Prepare the form in U.S. dollars.
U.S. shareholder of an applicable CFC.
A U.S. shareholder of an applicable CFC,
in order to arrive at ATI, must reduce its
tentative taxable income, by, among other
items, an amount equal to the sum of any
specified deemed inclusions that were
included in the computation of the
Section I—Business
Interest Expense (Lines 1
Through 5)
Line 1. Current year business interest
interest expense or disallowed business
interest expense carryforwards from prior
years) that would have been deductible in
the current year without the application of
section 163(j).
Change from non-excepted trade or
business to excepted trade or busi-
ness. If a taxpayer has disallowed
business interest expense from a prior
year, or excess business interest expense
from a partnership, for which an election to
be an excepted trade or business is made
in the current year, then the disallowed
business interest expense carried forward,
or excess business interest expense, is
still subject to the section 163(j) limitation.
taxpayer’s tentative taxable income,
reduced by the portion of the deduction
allowed under section 250(a) by reason of
the specified deemed inclusions. See
Regulations section 1.163(j)-1(b)(1)(ii)(G).
A specified deemed inclusion means the
-7-
Interest expense from an excepted
1366), at-risk (section 465) and passive
activity loss (section 469), and excess
business loss (section 461(l)) limitations
prior to inputting the tentative taxable
income amount.
interest expense, to the extent includable
in tentative taxable income, that is not
from a pass-through entity. For section
163(j), business interest expense does not
include interest from an excepted trade or
business.
trade or business should not be included.
earlier.
Do not include interest expense
allocated by a trading partnership to a
partner that does not materially
earlier.
For C corporations with an interest in a
partnership, any investment interest
expense allocated to the C corporation is
treated as business interest expense of
the C corporation from a non-excepted
trade or business.
The tentative taxable income of a
partnership or S corporation shall include
both separately and non-separately stated
items. For a partnership, this will generally
be the amount on Form 1065, Analysis of
Net Income (Loss), line 1, Net income
(loss), less guaranteed payments,
Note. Interest expense that is allocable to
an excepted trade or business is not
treated as business interest expense.
Line 9. Amount of any net operating
loss deduction under section 172.
Enter the amount of any net operating loss
deduction carried forward or carried back
to the current tax year under section 172.
Schedule K, line 4c. If adjustments to a
partnership's income or deductions
resulting from section 743(b) basis
adjustments are taken into account in
calculating a partnership's net income
(loss), remove the effects of those
Line 10. Amount of any qualified busi-
ness income deduction allowed under
section 199A. Enter the amount of any
qualified business income deduction
allowed under section 199A. To determine
ATI, the section 199A deduction on line 10
is determined without regard to section
163(j). See Regulations section
Line 2. Disallowed business interest
expense carryforwards from prior
years. Enter the prior year disallowed
business interest expense carryover. See
Form 8990, line 31, for prior year amount.
For consolidated groups with members
joining or leaving the group, see
Regulations section 1.163(j)-5, as
limitations may apply.
adjustments by adding or subtracting the
income, gain, loss, or deduction resulting
from the section 743(b) basis adjustments.
For an S corporation, this will generally be
the amount on Form 1120-S, Schedule K,
line 18, Income/loss reconciliation.
1.163(j)-1(b)(43).
To compute a partnership's and
partner's ATI, the partnership (not the
partner) takes into account items resulting
from adjustments to property under
section 734(b). See Regulations section
1.163(j)-6(d)(2). However, to compute ATI
or items resulting from adjustments to
property under section 743(b), the partner
(not the partnership) takes into account
such items.
Line 11. Reserved for future use.
Reserved for future use.
Line 2 does not apply to
Line 12. Amount of any loss or deduc-
tion items from a pass-through entity.
Enter any amount of loss or deduction
items from pass-through entities
partnerships.
!
CAUTION
If Form 8990 is being completed for an
applicable CFC with a functional currency
other than the U.S. dollar, and the amount
reported on line 2 is different from the
amount reported on line 31 of the prior
year Form 8990 due to the use of different
translation rates for translating from
functional currency to U.S. dollars in
different years, attach a statement
(regardless of whether the entity is subject
to the section 163(j) limitation).
Line 13. Other additions. Enter the
amount of any capital loss carryback or
carryover.
These adjustments are entered on
line 13 (or line 20) of Form 8990.
Additions (Lines 7 Through 16)
A taxpayer subject to the section 163(j)
limitation who has an interest in a
pass-through entity not subject to the
section 163(j) limitation should include
their share of the entity’s ATI in other
additions. See Ownership of pass-through
limitation, earlier.
Add back to tentative taxable income
certain adjustments to arrive at ATI. Do
not include amounts that were not taken
into account in tentative taxable income on
earlier.
providing the amount of the disallowed
business interest expense carryover in
functional currency and the translation rate
used in the current year and the prior year.
In the case of a CFC group member, a
single statement may be attached to the
CFC group's Form 8990 for all CFC group
members in lieu of separate statements
for each CFC group member.
Line 7. Any item of loss or deduction
which is not properly allocable to a
trade or business of the taxpayer.
Enter any item of loss or deduction that is
not properly allocable to a trade or
business of the taxpayer, including the
taxpayer’s loss or deduction from any
excepted trades or businesses. The
amount of the addition is limited to the
amount the additional item affected
tentative taxable income.
For example, a personal casualty loss
is not allocable to a trade or business of a
taxpayer, which would be entered on
line 7 as a positive amount to the extent
the casualty loss offset tentative taxable
income.
A C corporation should include
investment income from a pass-through
entity and any other tax items of a
partnership that are neither properly
allocable to a trade or business of the
partnership nor described in section
163(d) and that are allocated to a C
corporation partner as separately stated
items as other additions. See C
Line 4. Floor plan financing interest
Section II—Adjusted
Taxable Income (Lines 6
Through 22)
income, earlier.
Enter all numbers as positive amounts
unless otherwise indicated.
For trusts and estates subject to
section 163(j), add back the amount of any
income distribution deduction under
sections 651 and 661, and the deduction
under section 642(c).
The ATI of a beneficiary (including a
tax-exempt beneficiary) of a trust or a
decedent's estate is reduced by any
income (including any distributable net
income) received from the trust or estate
by the beneficiary to the extent such
income was necessary to permit a
Tentative Taxable Income
Line 6. Tentative taxable income. Enter
tentative taxable income computed as
though all of the business interest
Do not include amounts from
pass-through entities, which are entered
on line 12.
expense is otherwise allowable business
interest expense. In figuring tentative
taxable income, consider all other
Line 8. Any business interest expense
not from a pass-through entity. Add to
tentative taxable income all business
applicable limitations such as sections
163(f), 267, basis (sections 704 and
-8-
deduction under section 163(j)(1)(B) and
Regulations section 1.163(j)-2(b) for any
business interest expense of the trust or
estate that was in excess of any business
interest income of the trust or estate.
A U.S. shareholder of an applicable
CFC should include the amount added to
the U.S. shareholder's tentative taxable
income under 2020 Proposed Regulations
section 1.163(j)-7(j). Separately list each
inclusion by stand-alone applicable CFC
or CFC group member.
Line 20. Other reductions. Include floor Section IV—163(j)
plan financing interest expense.
Limitation Calculations
For tax years beginning in 2022, ATI is
(Lines 26 Through 31)
computed with deductions for
depreciation, amortization, depletion, and
Limitation on Business Interest
Expense
any other deduction prescribed in
published guidance.
Line 26. Applicable percentage of ATI
limitation. Multiply the ATI from line 22
by the applicable percentage. The
applicable percentage is 30% (30% ATI
limitation).
For a partnership or S corporation, if
line 26 is zero, enter -0- on lines 35 and
40.
If you are filing Form 8990 for an
applicable CFC, include the amount of any
related party dividend income. See
Regulations section 1.163(j)-7(g)(2).
A U.S. shareholder of an applicable
CFC should include an amount equal to
the sum of any specified deemed
A relevant foreign corporation should
include the amount of any deduction for
foreign income tax (as defined in
inclusions that were included in the
computation of the taxpayer's tentative
taxable income, reduced by the portion of
the deduction allowed under section
250(a) by reason of the specified deemed
inclusions. See Regulations section
1.163(j)-1(b)(1)(ii)(G). Separately list each
reduction by stand-alone applicable CFC
or CFC group member.
Regulations section 1.960-1(b)) that was
included in computing tentative taxable
income on line 6 since foreign income
taxes should not reduce ATI. See
Allowable Interest Expense
Line 30. Total current year business
interest expense deduction. A taxpayer
subject to the section 163(j) limitation will
enter on line 30 the smaller of line 29 or
line 5. Line 30 is the amount of current
year business interest expense deduction
allowed after considering the section
163(j) limitation.
If a partner is not subject to the section
163(j) limitation and has partnership
excess business interest expense treated
as paid or accrued in the current year,
enter the amount from Schedule A,
line 44, column (h). The amount will not be
subject to further limitation under section
163(j).
If the amount on line 29 is less than the
amount on line 5 and business interest
expense is reported on more than one
location on the return (such as ordinary
business interest expense and farming
interest expense), then the disallowed
business interest expense must be
allocated to each source in proportion to
the total amount of business interest
expense from each source. Attach a
schedule to Form 8990 that indicates the
amount and line item on the tax return
where the business interest expense is
being deducted.
Regulations section 1.163(j)-7(g)(3).
Also include any other additions
described in published guidance. If none,
leave blank.
Line 15. Total current year S corpora-
tion shareholder’s excess taxable in-
come. Enter the amount of any S
corporation excess taxable income
reported on Schedule B, line 46, column
(c).
Also include any other reductions
described in published guidance. If none,
leave blank.
A C corporation should include
investment expenses from a pass-through
entity and other tax items of a partnership
that are neither properly allocable to a
trade or business of the partnership nor
described in section 163(d) and that are
allocated to a C corporation partner as
separately stated items as other
Reductions (Lines 17 Through
21)
Subtract from tentative taxable income
certain adjustments to arrive at ATI. Do
not include amounts that were not taken
into account in tentative taxable income on
reductions. See C corporation business
interest expense and income, earlier.
Line 22. Adjusted taxable income
(ATI). If line 22 is zero or less, enter zero.
However, CFC group members should
follow instructions below.
Line 17. Any item of income or gain
which is not properly allocable to a
trade or business of the taxpayer.
Enter any item of income or gain, which is
not properly allocable to a trade or
business of the taxpayer, including the
taxpayer’s income or gain from any
excepted trade(s) or business(es).
For example, gain from the sale of a
taxpayer's personal residence would be
entered on line 17 because it is not gain
that is allocable to a trade or business of
the taxpayer.
CFC group members. If a CFC group
member has a negative amount of ATI, the
CFC group member should report the
negative amount on line 22. See
Regulations section 1.163(j)-7(c)(2)(i).
Section III—Business
Interest Income (Lines 23
Through 25)
Line 23. Current year business interest
income. Enter the amount of business
interest income directly paid to or accrued
by the taxpayer. This does not include
interest income from excepted trades or
businesses.
For C corporations with an interest in a
partnership, any investment interest
income allocated to the C corporation is
treated as business interest income of the
C corporation from a non-excepted trade
or business.
earlier.
Carryforward
Line 31. Disallowed business interest
expense. Subtract line 29 from line 5. If
zero or less, enter -0-.
Do not include amounts from
pass-through entities, which will be
entered on line 19.
Note. The amount on line 31 is used on
the taxpayer’s next year’s Form 8990,
line 2 (except for partnerships). If the
taxpayer completing this form is a
partnership, carry the amount on line 31 to
Part II, line 32, of the current year Form
8990.
Line 18. Any business interest income
not from a pass-through entity. Enter
all business interest income, to the extent
included in tentative taxable income on
line 6, that is not from a pass-through
entity (regardless of whether the entity is
subject to the section 163(j) limitation).
Part II—Partnership
Pass-Through Items
Line 19. Amount of any income or gain
items from a pass-through entity.
Enter the amount of any income or gain
items from pass-through entities.
Part II is completed by a partnership that is
subject to section 163(j) and is required to
file Form 8990. The partnership items are
-9-
allocated to the partners and are not
carried forward by the partnership.
business interest expense, and attach a
statement to the Form 8990 identifying the
partnership name and amount of negative
163(j) expense. See Regulations section
163(j)-6(h).
Line 44, column (h). Total excess busi-
ness interest expense treated as paid
or accrued. For the partners subject to
the section 163(j) limitation, add the
See the Instructions for Form 1065 for
how the partnership reports the excess
business interest expense, excess taxable
income, and excess business interest
income to the partners.
amounts entered on line 43, column (h),
for all partnerships listed. Enter this total
amount on Part I, line 3. For partners not
subject to the section 163(j) limitation,
include this amount on Part I, line 30.
Line 43, column (d). Prior year carry-
forward. From the prior year’s Form
8990, enter the amount from line 43,
column (i). Increase the prior year
carryover by the amount of negative
section 163(j) expense that is no longer
suspended, or if applicable, reduce the
prior year excess business interest
expense by the amount of negative
section 163(j) expense that relates to the
prior year excess business interest
expense. Attach a statement to the Form
8990 identifying the partnership name and
a description of the adjustments and the
amounts. See Regulations section
1.163(j)-6(h).
earlier.
Schedule B—Summary of
S Corporation
Part III—S Corporation
Pass-Through Items
Shareholder’s Excess
Taxable Income and
Excess Business Interest
Income
Part III is completed by an S corporation
that is subject to the section 163(j)
limitation. The S corporation’s excess
taxable income and excess business
interest income are allocated to the
shareholders pro rata after the S
corporation’s section 163(j) limitation is
determined and are not carried forward by
the S corporation.
Any taxpayer that is required to complete
Part I and is a shareholder in an S
corporation that is subject to the section
163(j) limitation must complete
Line 43, column (h). Excess business
interest expense treated as paid or ac-
crued. Enter the lesser of:
Schedule B before completing Part I.
On line 45, enter the amount of current
year excess taxable income in column (c)
and current year excess business interest
income in column (d), reported to the
shareholder on Schedule K-1 for each S
corporation.
See the Instructions for Form 1120-S
for how to report the excess taxable
income and the excess business interest
income to the shareholders.
The total excess business interest
•
expense amount in column (e), or
The current year excess taxable
•
income in column (f) plus the current year
excess business interest income in
column (g) from the same partnership.
Schedule A—Summary of
Partner’s Section 163(j)
Excess Items
Line 46, column (c). Total current year
excess taxable income. Add the
amounts entered on line 45, column (c),
for all S corporations listed. Enter this total
amount on Part I, line 15.
In addition, add any of the applicable
amounts listed below, and attach a
statement to the Form 8990 identifying the
partnership name, amount, and
description of addition.
Any taxpayer that is required to complete
Part I and is a partner in a partnership that
is subject to the section 163(j) limitation
must complete Schedule A before
Line 46, column (d). Total current year
excess business interest income. Add
the amounts entered on line 45, column
(d), for all S corporations listed. Combine
this total amount with Schedule A, line 44,
column (g) and enter the total on Part I,
line 24.
The amount of excess business interest
•
expense carryover on line 43(d) if the
partnership became an exempt entity
during the tax year. See Regulations
section 1.163(j)-6(m)(3).
completing Part I. For a foreign person
that is not a relevant foreign corporation
with an interest in a partnership engaged
in a U.S. trade or business, the amount of
excess items is limited to ECI. For such
foreign partners, report on Schedule A
only the ECI portion of the excess section
163(j) amounts and attach a statement
showing how the ECI portion of the excess
section 163(j) amounts were determined.
See 2020 Proposed Regulations section
1.163(j)-8(c) for additional information.
Any business interest expense that is
•
treated in the current tax year, as paid or
accrued under the transition rule of
regulation for trading partnerships. See
Regulations section 1.163(j)-6(c)(3).
Worksheet
A—Determination of Each
Partner's Deductible
Business Interest Expense
and Section 163(j) Excess
Items and Worksheet
B—Determination of Each
Partner's Relevant Section
163(j) Items
Line 43, column (i). Current year ex-
cess business interest expense carry-
forward. Columns 43(e) minus (h), less
any excess business interest expense that
previously reduced partner basis that you
are required to make a basis adjustment
to upon disposition of partnership interest.
See Regulations section 1.163(j)-6(h)(3).
On line 43, enter the amount of current
year excess business interest expense in
column (c), current year excess taxable
income in column (f), and the current year
excess business interest income in
column (g), reported to the partner on
Schedule K-1 for each partnership.
Line 44, column (f). Total current year
excess taxable income. If the partner is
subject to the section 163(j) limitation, add
the amounts entered on line 43, column
(f), for all partnerships listed. Enter this
total amount on Part I, line 14.
The Regulations provide guidance
regarding how a partnership subject to the
section 163(j) limitation must allocate its
deductible business interest expense and
section 163(j) excess items, if any, among
its partners. The Regulations provide that
deductible business interest expense and
section 163(j) excess items must be
Do not include excess business
interest expense that is suspended under
the basis limitation rules of section 704(d).
See Regulations section 1.163(j)-6(h) for
basis adjustment calculations and
ordering rules for losses under section
704(d).
Line 44, column (g). Total current year
excess business interest income. For
the partners subject to the section 163(j)
limitation, add the amounts entered on
line 43, column (g), for all partnerships
listed. Combine this total amount with
Schedule B, line 46, column (d) and enter
the total on Part I, line 24.
allocated in accordance with the 11-step
computation shown in Worksheets A and
B. See Regulations section 1.163(j)-6(f).
The partnership should use Worksheets A
and B in these instructions and is
Line 43, column (c). Current year.
Reduce the current year excess business
interest expense by the amount of
negative section 163(j) expense that
relates to the current year excess
-10-
responsible for keeping records that
compute the allocation. Partnerships that
allocate all section 163(j) items in step 2
proportionately do not need to use
Worksheets A and B.
group, the U.S. shareholders that file the
CFC group's Form 8990 must attach
Worksheet C to their tax return together
with the CFC group's Form 8990 and
complete Part I of the CFC group's Form
8990 in accordance with these
CFC Group election is being calculated.
Also enter the amount from line 2 on Form
8990, line 5.
Line 3. Subtract line 2 from line 1. If
the amount on line 3 is greater than or
equal to zero, the safe-harbor requirement
is met if all other eligibility requirements
are met. Check “Yes” on Form 8990, line
D. Skip lines 4 through 14, continue to
line 15. Leave the remaining lines of Form
8990, Part I (all lines other than line 5 and
line 25) blank.
Lines 1 through 7 of Worksheet A are
taken from the partnership’s Form 8990,
which it must complete first. Lines 8
through 10 reflect the manner in which the
partnership allocated its ATI, business
interest income, and business interest
expense to its partners. Only items that
were taken into account in lines 1 through
3 are taken into account in lines 8 through
10. As a result, section 743(b)
instructions for Worksheet C.
Complete Worksheet C before
completing Part I of Form 8990. Complete
lines A through D of Form 8990 in
accordance with the instructions
discussed earlier in Specific Instructions
and complete the remainder of Form 8990
in accordance with the instructions below.
If a safe-harbor election is made,
Schedules A and B should not be
completed.
If the amount on line 3 is less than zero,
continue to line 4.
Line 4. Qualified tentative taxable in-
come (QTTI). Enter the stand-alone
applicable CFC's QTTI if a stand-alone
election is being calculated. Enter the CFC
group's QTTI if a CFC group election is
being calculated. Also enter the amount
from line 4 on Form 8990, line 6.
adjustments, section 704(c) remedial
allocations, allocations of investment
income and expense, and amounts
determined for the partner under
A safe-harbor election may be made
only for a stand-alone applicable CFC or
for a CFC group. Thus, for example, it may
not be made for an applicable CFC that is
a specified group member if a CFC group
election is not in effect, and it may not be
made for any CFC group member unless it
is made with respect to the CFC group as
a whole.
Regulations section 1.882-5 are not taken
into account in lines 8 through 10. See
Regulations section 1.163(j)-6(f)(2)(ii) for
the definitions of “allocable ATI” (line 8),
“allocable business interest income”
(line 9), and “allocable business interest
expense” (line 10). All of the information
necessary to complete the rest of
With respect to a stand-alone
applicable CFC, QTTI means an
applicable CFC's tentative taxable income
for the tax year, determined by taking into
account only items properly allocable to a
non-excepted trade or business. With
respect to a CFC group, QTTI means the
sum of each CFC group member's
Worksheets A and B is contained in lines
1 through 10. See the Instructions for
Form 1065 for how the partnership reports
the excess business interest expense,
excess taxable income, and excess
business interest income to the partners.
For purposes of the safe-harbor
election, all items must be determined
using the U.S. dollar. If business interest
income, business interest expense, or any
items that are taken into account in
computing QTTI are maintained in a
currency other than the U.S. dollar, then
those items must be translated into the
U.S. dollar using the average exchange
rate for the tax year (or specified year, as
applicable).
tentative taxable income for the specified
tax year, determined by taking into
account only items properly allocable to a
non-excepted trade or business. See
Regulations section 1.163(j)-7(h)(4).
The calculation in Regulations sections
1.163(j)-6(f)(2)(i) through (xi) is solely for
determining each partner’s allocable share
of deductible business interest expense,
excess business interest expense, excess
taxable income, and excess business
interest income. Accordingly, no rule set
forth in Regulations section 1.163(j)-6(f)(2)
prohibits a partnership from making an
allocation to a partner that is otherwise
permitted under section 704 and the
regulations thereunder.
Line 5. Thirty percent of QTTI. Multiply
QTTI from line 4 by 30% (0.30).
General instructions for lines 6
Line A. Stand-alone election. Check
the box if the election is made for a
stand-alone applicable CFC. A
through 9. The amounts on lines 6
through 9 are determined based on the
amounts that would be included and
deducted by a hypothetical domestic
corporation if the domestic corporation
had a tax year ending on the last date of
the tax year of the stand-alone applicable
CFC (or specified period of the CFC
group), it wholly owned the stand-alone
applicable CFC throughout the CFC's tax
year (or wholly owned each CFC group
member throughout the CFC group
member's specified tax year), it did not
own any assets other than stock in the
stand-alone applicable CFC (or CFC
group members), and it had no other items
of income, gain, deduction, or loss.
Additionally, the amounts on lines 6
through 9 are determined by taking into
account any elections that are made with
respect to the applicable CFC(s),
stand-alone applicable CFC is an
applicable CFC that is not a specified
group member and therefore not eligible
to be a CFC group member.
Line B. CFC group election. Check the
box if the election is made for a CFC
group.
Worksheet
C—Stand-Alone
Applicable CFC/CFC
Group Safe Harbor
Election
Line C. If a CFC group election has been
made, for the specified period, does any
CFC group member have any pre-group
disallowed business interest expense
carryforward? If yes, the CFC group is not
eligible for the safe-harbor.
Worksheet C is used to determine
eligibility for the safe-harbor election under
Regulations section 1.163(j)-7(h). Fill out
Section 1 to indicate the type of election.
Sections 2, 3, 4, and 5 determine
Line 1. Business interest income.
Enter the stand-alone applicable CFC's
business interest income if a stand-alone
election is being calculated. Enter the CFC
group's business interest income if a CFC
Group election is being calculated. Also
enter the amount from line 1 on Form
8990, line 25.
eligibility. If the safe-harbor election is
made for a stand-alone applicable CFC,
the U.S. shareholders that file Form 8990
for the stand-alone applicable CFC must
attach Worksheet C to their tax returns
together with the Form 8990 of the
including under Regulations section
1.954-1(d)(5) (relating to the subpart F
high-tax exception) and Regulations
section 1.951A-2(c)(7)(viii) (relating to the
GILTI high-tax exclusion). These amounts
are also determined without regard to any
section 163(j) limitation on business
interest expense and without regard to any
disallowed business interest expense
stand-alone applicable CFC and complete
Part I of the stand-alone applicable CFC's
Form 8990 in accordance with these
instructions for Worksheet C. If the
Line 2. Business interest expense.
Enter the stand-alone applicable CFC's
business interest expense if a stand-alone
election is being calculated. Enter the CFC
group's business interest expense if a
safe-harbor election is made for a CFC
-11-
carryovers. In addition, those amounts are
determined by only taking into account
items of the applicable CFC(s) that are
properly allocable to a non-excepted trade
or business under Regulations section
1.163(j)-10. See Regulations section
1.163(j)-7(h)(3).
allowed for the hypothetical domestic
corporation under section 245A (by
reason of section 964(e)(4)).
lines other than lines 5, 6, 22, and 25)
blank.
If the amount on line 14 is less than
zero, the safe-harbor eligibility
requirements are not met.
Line 10. Total eligible amount.
Combine lines 6 through 9. Enter the
amount on Form 8990, line 22.
Line 15. Name(s) of all designated U.S.
persons. Enter the name(s) of all
designated U.S. persons. Attach an
additional statement if necessary.
Line 11. Thirty percent of eligible
amount. Multiply the eligible amount
(line 10) by 30% (0.30).
Line 6. Section 951(a)(1)(A) amount.
Include on line 6 amounts that would be
includable by the hypothetical domestic
corporation under section 951(a)(1)(A).
Line 16. Taxpayer identification num-
ber(s) of line 15. Enter the taxpayer
identification number(s) for all persons
listed on line 15. Attach an additional
statement if necessary.
Line 12. Enter the lesser of line 5 or
line 11.
Line 7. Section 951A(a) amount.
Include on line 7 amounts that would be
includable by the hypothetical domestic
corporation under section 951A(a).
Line 13. Business interest expense.
Enter the amount from line 2.
Line 14. Subtract line 13 from line 12.
If the amount on line 14 is greater than or
equal to zero, the safe-harbor requirement
is met if all other eligibility requirements
are met. Check “Yes” box on Form 8990,
line D, and continue to line 15. Leave the
remaining lines of Form 8990, Part I (all
Line 17. Tax year or specified period
(as applicable). Enter the stand-alone
applicable CFC's tax year or the CFC
group's specified period to which the
election relates.
Line 8. Section 250 amount. Include on
line 8 any deduction that would be allowed
for the hypothetical domestic corporation
under section 250(a)(1)(B)(i).
Line 9. Section 245A amount. Include
on line 9 any deduction that would be
Average Annual Gross Receipts Worksheet Per Section 448(c)
Column A
Column B
Column C
1st preceding tax year
2nd preceding tax year
3rd preceding tax year
1. Annual gross receipts
2. Plus annual gross receipts of related entities per aggregate rules
$
$
$
$
$
$
3. Total annual gross receipts
$
$
$
4. Average annual gross receipts (line 3 columns A + B + C divided by
3)
$
-12-
Determination of Each Partner’s Deductible Business Interest Expense
and Section 163(j) Excess Items—Worksheet A
Keep for Your Records
✓ Complete Form 8990 before beginning this worksheet.
Before you begin:
✓ This worksheet provides space for up to three partners. If there are more than three partners, use more than
one worksheet. The total column should reconcile to amounts for all partners.
Partner 1
Step 1: Partnership‐level calculation required by section 163(j)(4)(A).
1. Partnership’s Adjusted Taxable Income (ATI) (Form 8990, line 22)
2. Partnership’s business interest income (Form 8990, line 25)
3. Partnership’s business interest expense (Form 8990, subtract
line 4 from line 5)
4. Partnership’s deductible business interest expense (Form 8990,
subtract line 4 from line 30) .
5. Partnership’s excess business interest expense (Form 8990, line 32)
6. Partnership’s excess taxable income (Form 8990, line 36)
Partner 2
Partner 3
Total
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
7. Partnership’s excess business interest income (Form 8990, line 37)
Step 2: Determine each partner’s section 163(j) items.
8. Partner’s allocable ATI. See instructions .
.
.
.
.
.
.
9. Partner’s allocable business interest income. See instructions
10. Partner’s allocable business interest expense. See instructions
Step 3: Partner‐level comparison of business interest income and business interest expense.
11. Subtract line 10 from line 9. (If zero or less, enter ‐0‐.) .
12. Subtract line 9 from line 10. (If zero or less, enter ‐0‐.) .
.
.
.
.
Step 4: Matching partnership and aggregate partner excess business interest income.
13. Divide line 11 by the line 11 total column amount. (If the total
column equals zero, enter ‐0‐.)
.
.
.
.
.
.
.
.
.
%
%
%
%
%
%
%
14. Multiply line 13 by the line 12 total column amount .
15. Subtract line 14 from line 11. (If zero or less, enter ‐0‐.)
.
.
.
.
.
Step 5: Remaining business interest expense determination.
16. Divide line 12 by the line 12 total column amount. (If the total
column equals zero, enter ‐0‐.)
.
.
.
.
.
.
.
.
.
%
17. Multiply line 16 by the line 11 total column amount .
18. Subtract line 17 from line 12. (If zero or less, enter ‐0‐.)
Step 6: Determination of final allocable ATI.
.
.
.
.
.
19. If line 8 is greater than or equal to $0, enter the amount from
line 8. Otherwise, enter ‐0‐ .
20. If line 8 is less than $0, enter the absolute value of line 8.
Otherwise, enter ‐0‐ .
21. Divide line 19 by the line 19 total column amount. (If the total
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
column equals zero, enter ‐0‐.)
.
.
.
.
.
.
.
.
.
%
%
%
%
22. Multiply line 21 by the line 20 total column amount .
23. Subtract line 22 from line 19. (If zero or less, enter ‐0‐.)
.
.
.
.
.
Step 7: Partner‐level comparison of the applicable percentage of ATI and remaining business interest expense.
24. Multiply line 23 by the applicable percentage (deꢀned earlier)
25. Subtract line 18 from line 24. (If zero or less, enter ‐0‐.)
26. Subtract line 24 from line 18. (If zero or less, enter ‐0‐.)
.
.
.
.
-13-
Determination of Each Partner’s Deductible Business Interest Expense
and Section 163(j) Excess Items—Worksheet A—Continued
Keep for Your Records
Partner 1
Step 8: Partner priority right to ATI capacity excess determination.
Partner 2
Partner 3
Total
Yes
Yes
Yes
Yes
No
No
No
No
27a. Is the line 5 total column amount greater than zero?
27b. Is the line 20 total column amount greater than zero?
27c. Is the line 26 total column amount greater than zero?
27d. Are lines 27(a), 27(b), and 27(c) all “Yes”?
.
28. If line 27d is “No,” enter the amount from line 25. Otherwise,
complete Worksheet B .
29. If line 27d is “No,” enter the amount from line 26. Otherwise,
complete Worksheet B .
30. If line 27d is “No,” enter -0-. Otherwise, complete Worksheet B
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
Step 9: Matching partnership and aggregate partner excess taxable income.
31. Divide line 28 by the line 28 total column amount. (If the total
column equals zero, enter -0-.)
.
.
.
.
.
.
.
.
.
%
%
%
%
%
%
%
32. Multiply line 31 by the line 29 total column amount .
33. Subtract line 32 from line 28. (If zero or less, enter -0-.)
.
.
.
.
.
Step 10: Match partnership and aggregate partner excess business interest expense.
34. Divide line 29 by the line 29 total column amount. (If the total
column equals zero, enter -0-.)
.
.
.
.
.
.
.
.
.
%
35. Multiply line 34 by the line 28 total column amount .
.
.
.
36. If line 30 is greater than zero, enter the amount from line 30.
Otherwise, subtract line 35 from line 29. (If zero or less, enter -0-.)
Step 11: Final section 163(j) excess item and deductible business interest expense allocation.
37. Partner’s deductible business interest expense. Subtract line
36 from line 10
.
.
.
.
.
.
.
.
.
.
.
.
.
.
38. Partner’s excess business interest expense. Enter the amount
from line 36
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
39. Partner’s excess taxable income. Multiply line 33 by (10/3)
40. Partner’s excess business interest income. Enter the amount
from line 15
Note.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
• Line 3: Equals the partnership’s business interest expense, not taking into account ꢀoor plan ꢁnancing interest expense. From Form 8990,
subtract line 4 from line 5.
• Line 4: Equals the partnership’s deductible business interest expense, not taking into account ꢀoor plan ꢁnancing interest expense. From
Form 8990, subtract line 4 from line 30.
• Line 8: Equals “allocable ATI” as deꢁned in Proposed Regulations section 1.163(j)‐6(f)(2)(ii).
• Line 9: Equals “allocable business interest income” as deꢁned in Proposed Regulations section 1.163(j)‐6(f)(2)(ii). The line 9 total column
amount must equal the line 2 total column amount.
• Line 10: Equals “allocable interest expense” as deꢁned in Proposed Regulations section 1.163(j)‐6(f)(2)(ii). The line 10 total column amount
must equal the line 3 total column amount.
• Line 23: The line 23 total column amount must equal the line 1 total column amount.
• Line 27d: If line 27d is “Yes,” the partnership must complete Worksheet B (in order to get the correct values for lines 28–30) before proceeding
to line 31 of Worksheet A.
• Line 37: The line 37 total column amount must equal the line 4 total column amount.
• Line 38: The line 38 total column amount must equal the line 5 total column amount.
• Line 39: The line 39 total column amount must equal the line 6 total column amount.
• Line 40: The line 40 total column amount must equal the line 7 total column amount.
• The lines 13, 16, 21, 31, and 34 total column amount must equal 100% or zero.
-14-
Determination of Each Partner’s Relevant
Section 163(j) Items—Worksheet B
Keep for Your Records
Before you begin: ✓ Complete “Determination of Each Partner’s Deductible Business Interest Expense and Section 163(j)
Excess Items—Worksheet A” before beginning this worksheet.
✓ This worksheet provides space for up to three partners. If there are more than three partners, use more than
one worksheet. The total column should reconcile to amounts for all partners.
Step 8A: Who must complete this worksheet.
1. If the answer to line 27(d) of Worksheet A is “Yes,” complete
this worksheet.
Partner 1
Partner 2
Partner 3
Total
Step 8B: Determine whether to perform Step 8C or Step 8D.
2. Subtract line 23 of Worksheet A from line 19 of Worksheet A .
3. Multiply line 2 of Worksheet B by the applicable percentage .
4. If line 26 of Worksheet A is greater than zero, enter the amount
from line 3 of Worksheet B. Otherwise, enter -0-
5. Enter the smaller of line 4 of Worksheet B or line 26 of
Worksheet A .
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6. If the line 25 total column amount of Worksheet A is greater
than or equal to the line 5 total column amount of Worksheet
B, complete Step 8C of Worksheet B. If the line 5 total column
amount of Worksheet B is greater than the line 25 total column
amount of Worksheet A, complete Step 8D of Worksheet B.
Step 8C: Calculate lines 28, 29, and 30 of Worksheet A. Return to and complete Worksheet A after Step 8C.
7. Divide line 25 of Worksheet A by the line 25 total column
amount of Worksheet A. (If the line 25 total column amount of
Worksheet A equals zero, enter -0-.) .
8. Multiply line 7 of Worksheet B by the line 5 total column
amount of Worksheet B
9. Subtract line 8 of Worksheet B from line 25 of Worksheet A.
Enter the amount(s) on line 28 of Worksheet A
10. Subtract line 5 of Worksheet B from line 26 of Worksheet A.
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Enter the amount(s) on line 29 of Worksheet A
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11. Enter ‐0‐ on line 30 of Worksheet A.
Step 8D: Calculate lines 28, 29, and 30 of Worksheet A. Return to and complete Worksheet A after Step 8D.
12. Divide line 4 of Worksheet B by the line 4 total column amount
of Worksheet B. (If the line
Worksheet B equals zero, enter -0-.) .
13. Multiply line 12 of Worksheet B by the line 25 total column
amount of Worksheet A
14. If line 4 of Worksheet B is greater than zero, enter the amount
from line 26 of Worksheet A. Otherwise, enter -0-
4
total column amount of
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15. Subtract line 14 of Worksheet B from line 13 of Worksheet B.
(If zero or less, enter -0-.) Enter the amount(s) on line 28 of
Worksheet A .
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16. Subtract line 13 of Worksheet B from line 14 of Worksheet B.
(If zero or less, enter -0-.) Enter the amount(s) on line 29 of
Worksheet A .
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17. If line 4 of Worksheet B equals zero, enter the amount from
line 26 of Worksheet A. Otherwise, enter -0-. Enter the
amount(s) on line 30 of Worksheet A .
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-15-
Stand-Alone Applicable CFC/CFC Group Safe Harbor Election
Section 163(j) Items—Worksheet C
Attach to Your Return
Name of foreign entity
Employer identiꢀcation number, if any
Reference ID number
Section 1—Type of Safe-Harbor Election
A. Stand-alone election
B. CFC group election
C. If CFC group election has been made, for the speciꢀed period, does any CFC group member have any pre-group disallowed
business interest expense carryforward? Yes No
If “Yes,” STOP; the CFC group is not eligible for safe-harbor.
Section 2—Business Interest Income Safe-Harbor Calculation
1
2
3
Business interest income
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1
2
Business interest expense .
Subtract line 2 from line 1. See instructions
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3
5
Section 3—Qualified Tentative Taxable Income Calculation
4
5
Qualiꢀed tentative taxable income
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4
Multiply qualiꢀed tentative taxable income (line 4) by the applicable percentage. See instructions
Section 4—Eligible Amount Calculation
6
7
8
9
Section 951(a)(1)(A) amount
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6
7
Section 951A(a) amount
Section 250 amount .
Section 245A amount
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8
(
(
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9
)
10 Total eligible amount. Combine lines 6 through 9
10
11 Multiply eligible amount (line 10) by the applicable percentage. See instructions
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11
Section 5—Safe-Harbor Calculation
12 Enter the lesser of line 5 or line 11
13 Business interest expense .
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12
13
14
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14 Subtract line 13 from line 12. See instructions
Section 6—Name and Taxpayer Identification Number of All Designated U.S. Persons
15 Name(s) of all designated U.S. persons
16 Taxpayer identiꢀcation number(s) of persons on line 15
17 Taxable year or speciꢀed period (as applicable)
-16-
unless the form displays a valid OMB
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retained as long as their contents may
become material in the administration of
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returns and return information are
approved under OMB control number
1545-0123 and is included in the
estimates shown in the instructions for
their business income tax return.
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ask for the information on this form to carry
out the Internal Revenue laws of the
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the information. We need it to ensure that
you are complying with these laws and to
allow us to figure and collect the right
amount of tax.
If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler,
we would be happy to hear from you. See
the instructions for the tax return with
which this form is filed.
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The time needed to complete and file
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-17-