Screen 8990 - Business Interest Expense Limitation (1120)

Alerts and notices

General Information

Enter the corporation’s net receipts for the prior three years. If the corporation has been in existence for fewer than three years, enter the net receipts for the years the corporation was in existence.

Whenever possible, UltraTax/1120 automatically updates the corporation’s small business net receipt fields based on the data entered on Screen History. The corporation's net receipts are calculated according to Temporary Regulation Section 1.448-1T(f)(2)(iv). The application generates an informational diagnostic to review the corporation's net receipts for completeness.

For a C Corporation, UltraTax/1120 sums the following fields on Screen HistoryC and updates the result to the small business net receipts fields on Screen 8990.

  • Net receipts
  • Dividend income
  • Interest income
  • Rental income
  • Royalties
  • Net capital gain
  • Net gain (loss) from Form 4797
  • Other income (loss)

For an S Corporation, UltraTax/1120 sums the following fields on Screen HistoryS and updates the result to the small business net receipts fields on Screen 8990. You will need to modify the corporation’s net receipts fields on Screen 8990 to include the S Corporation’s gross rental income, if applicable.

  • Net receipts
  • Other income (loss)
  • Interest income
  • Dividend income
  • Royalties
  • Net capital gain (loss)
  • Net Section 1231 gain (loss)
  • Other income (loss)

Perform the following steps to force the application to calculate taxable income, as well as other amounts for Form 8990. Note that if you change, add, or remove any data after performing these steps, you will need to repeat the process to capture the updated information.

  1. Complete all data entry in the return.
  2. Enter 1 in the Use calculated amounts on Form 8990 field.
  3. Choose View > Form or print preview the return.
  4. Enter 2 in the Use calculated amounts on Form 8990 field.
Once you complete these steps, the application calculates the following amounts as if the business interest expense was deducted in full: net operating loss; taxable income; depreciation, amortization and depletion; amount of loss; deduction; and income or gain items from a pass-through entity.

If the shareholder is subject to the interest expense limitation but the S Corporation is not, the shareholder must include their share of the S Corporation’s business interest expense, adjusted taxable income, and business interest income on Form 8990. Because the Form 8990 would not commonly be filed by an individual or trust shareholder, UltraTax/1120 will not print this information in the Schedule K-1, Line 17 AC statement unless you mark this field.

Taxable Income

Enter the corporation’s taxable income as if the interest expense was allowed in full if you wish to overwrite the system calculated amount. See the field help for the Use calculated amounts on Form 8990 for more information.

Include the loss from an excepted trade or business. See 1120-US: Excepted trade or business under Section 163(j) (FAQ) for more information.

Enter the amount of depreciation, amortization, and depletion included in the taxable income amount entered in the Taxable income field if you wish to overwrite the system calculated amount. See the field help for the Use calculated amounts on Form 8990 for more information.

Enter the amount of capital loss carryover or carryback included in the taxable income amount entered in the Taxable income field if you wish to overwrite the system calculated amount. See the field help for the Use calculated amounts on Form 8990 field for more information.

Include the income from an excepted trade or business. See 1120-US: Excepted trade or business under Section 163(j) (FAQ) for more information.

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