2018 UltraTax CS
Question
How should the Meets criteria for excepted trade or business under Section 163(j) field be answered?
Answer
This field is found on each of the activity screens, including Screen 1120. It asks whether or not the activity is exempt from the Section 163(j) limitations. (The field on Screen 1120 pertains to the income reported on Page 1 of the corporate return.)
Enter 2 (No) if the income is not from an excepted trade or business per page 2 of the Form 8990 instructions. The income will be included on Form 8990 and the form will print with the return.
Enter 1 (Yes) if the corporation has income only from an excepted trade or business and is therefore exempt from filing Form 8990. The form will not print if you select Yes for this field, however you may need to enter additional data about the election if the excepted trade or business includes:
- A utility business. The Section 163(j) limitation does not apply to a utility's trade or business specified in Section 163(j)(7)(A)(iv). No other election is required for this type of trade or business.
- A real property trade or business that has elected out of the Section 163(j) limitation under Section 163(j)(7)(B). Enter data in the Section 1.163(j)-9 election statement dialog in Screen Elect in the Elections folder to make this election.
- A farming business that has elected out of the Section 163(j) limitation under Section 163(j)(7)(C). Enter data in the Section 1.163(j)-9 election statement dialog in Screen Elect in the Elections folder to make this election.
If all activities on the return are excepted and coded with 1 (Yes) and any required elections are completed, Form 8990 will not print unless there is excess business interest income from a partnership.