Section 163(j) and Form 8990 (1065)

Alerts and notices

Overview

This article provides information about how UltraTax/1065 calculates Form 8990, Limitation on Business Interest Expense Under Section 163(j).

Section 163(j)

IRC section 163(j) was amended under the 2017 Tax Cuts and Jobs Act (TCJA) to reflect a new limitation on the deduction for business interest expense for certain taxpayers in tax years beginning after 2017. Visit this IRS resource for answers to common questions surrounding this new limitation: Basic questions and answers about the limitation on the deduction for business interest expense External link. (What's this?)

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Form 8990

The new section 163(j) business interest expense deduction and carryover amounts are reported on Form 8990. The form calculates the section 163(j) limitation on business interest expenses in coordination with other limits. Refer to the Form 8990 instructions External link for more information on the filing requirements and calculations.

Data entry and printing

To calculate and print Form 8990, use the following input screens and fields.

To stop Form 8990 from printing, see the "Excepted trade or business" and the "Small business taxpayer" sections below.

Excepted trade or business

Certain trades or businesses qualify as excepted from the section 163(j) limitation and therefore are not required to file Form 8990. For more information on what types of trades or business are excepted, see the Form 8900 instructions.

To indicate that a trade or business is exempt, use the Meets criteria for an excepted trade or business under Section 163(j) field on each of the activity screens: Screen Inc, Screen F, Screen 4835, and Screen Rent. Excepted trades or businesses may be required to file an election to be excepted. See 1065-US: Excepted trade or business under Section 163(j) for more information.

Small business taxpayer

To indicate that the taxpayer is a small business taxpayer, mark the Small business taxpayer field on Screen 8990 in the Schedule K folder. If there is no excess business interest expense in the return passed-through from another partnership, marking the field will stop Form 8990 from printing. If there is business interest expense passed-through from another partnership, Form 8990 will calculate per the instructions and print. 

Partner's Schedule K-1

Even if the partnership isn't required to file Form 8990, some of the partners may need information from Form 8990 for their individual returns. For this reason, partner K-1s with income may receive amounts for Box 20 with code AH. To suppress this information from printing, mark the Suppress K1 supplemental detail of business interest expense limitation field on Screen 8990.

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