IRS issues final regulations and other guidance on business interest expense deduction limitation [税金]
The Internal Revenue Service issued final regulations regarding the provision of the Tax Cuts and Jobs Act that limits the deduction for business interest expense, including basic statutory amendments made by the CARES Act.
For tax years beginning after December 31, 2017, business interest expense deductions are generally limited to the sum of:
•the taxpayer's business interest income;
•30 percent (or 50 percent, as applicable) of the taxpayer's adjusted taxable income; and
•the taxpayer's floor plan financing interest expense.
The business interest expense deduction limitation does not apply to certain small businesses whose gross receipts are $26 million or less, electing real property trades or businesses, electing farming businesses, and certain regulated public utilities. The $26 million gross receipts threshold applies for the 2020 tax year and will be adjusted annually for inflation.
A real property trade or business or a farming business may elect to be excepted from the business interest expense limitation. However, taxpayers cannot claim the additional first-year depreciation deduction for certain types of property held by the electing trade or business.
Taxpayers use Form 8990, Limitation on Business Interest Expense Under Section 163(j), to calculate and report their deduction and the amount of disallowed business interest expense to carry forward to the next tax year.
Along with the final regulations, the IRS today issued the following additional items of guidance related to the business interest expense deduction limitation.
(Source of quote)
IR-2020-171, July 28, 2020
For tax years beginning after December 31, 2017, business interest expense deductions are generally limited to the sum of:
•the taxpayer's business interest income;
•30 percent (or 50 percent, as applicable) of the taxpayer's adjusted taxable income; and
•the taxpayer's floor plan financing interest expense.
The business interest expense deduction limitation does not apply to certain small businesses whose gross receipts are $26 million or less, electing real property trades or businesses, electing farming businesses, and certain regulated public utilities. The $26 million gross receipts threshold applies for the 2020 tax year and will be adjusted annually for inflation.
A real property trade or business or a farming business may elect to be excepted from the business interest expense limitation. However, taxpayers cannot claim the additional first-year depreciation deduction for certain types of property held by the electing trade or business.
Taxpayers use Form 8990, Limitation on Business Interest Expense Under Section 163(j), to calculate and report their deduction and the amount of disallowed business interest expense to carry forward to the next tax year.
Along with the final regulations, the IRS today issued the following additional items of guidance related to the business interest expense deduction limitation.
(Source of quote)
IR-2020-171, July 28, 2020
