Code of Federal Regulations · Section
§ 1.163(j)-0 — (j)-0 Table Of Contents
26 C.F.R. § 1.163(j)-0
This section lists the table of contents for §§ 1.163(j)-1 through 1.163(j)-11.
(a) In general.
(b) Definitions.
(1) Adjusted taxable income.
(i) Additions.
(ii) Subtractions.
(iii) Depreciation, amortization, or depletion capitalized under section 263A.
(iv) Application of § 1.163(j)-1(b)(1)(ii)(C), (D), and (E).
(A) Sale or other disposition.
(1) In general.
(2) Intercompany transactions.
(3) Deconsolidations.
(4) Nonrecognition transactions.
(B) Deductions by members of a consolidated group.
(1) In general.
(2) Application of the alternative computation method.
(C) Successor rules.
(1) Successor assets.
(2) Successor entities.
(D) Anti-duplication rule.
(1) In general.
(2) Adjustments following deconsolidation.
(E) Alternative computation method.
(1) Alternative computation method for property dispositions.
(2) Alternative computation method for dispositions of member stock.
(3) Alternative computation method for dispositions of partnership interests.
(F) Cap on negative adjustments.
(1) In general.
(2) Example.
(G) Treatment of depreciation, amortization, or depletion capitalized under section 263A.
(v) Other adjustments.
(vi) Additional rules relating to adjusted taxable income in other sections.
(vii) ATI cannot be less than zero.
(viii) Examples.
(2) Applicable CFC.
(3) Business interest expense.
(i) In general.
(ii) Special rules.
(4) Business interest income.
(i) In general.
(ii) Special rules.
(5) C corporation.
(6) Cleared swap.
(7) Consolidated group.
(8) Consolidated return year.
(9) Current-year business interest expense.
(10) Disallowed business interest expense.
(11) Disallowed business interest expense carryforward.
(12) Disallowed disqualified interest.
(13) Electing farming business.
(14) Electing real property trade or business.
(15) Excepted regulated utility trade or business.
(i) In general.
(A) Automatically excepted regulated utility trades or businesses.
(B) Electing regulated utility trades or businesses.
(C) Designated excepted regulated utility trades or businesses.
(ii) Depreciation and excepted and non-excepted utility trades or businesses.
(A) Depreciation.
(B) Allocation of items.
(iii) Election to be an excepted regulated utility trade or business.
(A) In general.
(B) Scope and effect of election.
(1) In general.
(2) Irrevocability.
(C) Time and manner of making election.
(1) In general.
(2) Election statement contents.
(3) Consolidated group's or partnership's trade or business.
(4) Termination of election.
(5) Additional guidance.
(16) Excess business interest expense.
(17) Excess taxable income.
(18) Floor plan financing indebtedness.
(19) Floor plan financing interest expense.
(20) Group.
(21) Intercompany transaction.
(22) Interest.
(i) In general.
(ii) Swaps with significant nonperiodic payments.
(A) In general.
(B) Exception for cleared swaps.
(C) Exception for non-cleared swaps subject to margin or collateral requirements.
(iii) Other amounts treated as interest.
(A) Treatment of premium.
(1) Issuer.
(2) Holder.
(B) Treatment of ordinary income or loss on certain debt instruments.
(C) Substitute interest payments.
(D) Section 1258 gain.
(E) Factoring income.
(F) Section 163(j) interest dividends.
(1) In general.
(2) Limitation on amount treated as interest income.
(3) Conduit amounts.
(4) Holding period.
(5) Exception to holding period requirement for money market funds and certain regularly declared dividends.
(iv) Anti-avoidance rules.
(A) Principal purpose to reduce interest expense.
(1) Treatment as interest expense.
(2) Corresponding treatment of amounts as interest income.
(B) Interest income artificially increased.
(C) Principal purpose.
(D) Coordination with anti-avoidance rule in § 1.163(j)-2(j).
(v) Examples.
(23) Interest expense.
(24) Interest income.
(25) Member.
(26) Motor vehicle.
(27) Old section 163(j).
(28) Ownership change.
(29) Ownership date.
(30) Real estate investment trust.
(31) Real property.
(32) Regulated investment company.
(33) Relevant foreign corporation.
(34) S corporation.
(35) Section 163(j) interest dividend.
(i) In general.
(ii) Reduction in the case of excess reported amounts.
(iii) Allocation of excess reported amount.
(A) In general.
(B) Special rule for noncalendar year RICs.
(iv) Definitions.
(A) Reported section 163(j) interest dividend amount.
(B) Excess reported amount.
(C) Aggregate reported amount.
(D) Post-December reported amount.
(E) Excess section 163(j) interest income.
(v) Example.
(36) Section 163(j) limitation.
(37) Section 163(j) regulations.
(38) Separate return limitation year.
(39) Separate return year.
(40) Separate tentative taxable income.
(41) Tax-exempt corporation.
(42) Tax-exempt organization.
(43) Tentative taxable income.
(i) In general.
(ii) [Reserved]
(iii) Special rules for defining tentative taxable income.
(44) Trade or business.
(i) In general.
(ii) Excepted trade or business.
(iii) Non-excepted trade or business.
(45) Unadjusted basis.
(46) United States shareholder.
(c) Applicability date.
(1) In general.
(2) Anti-avoidance rules.
(3) Swaps with significant nonperiodic payments.
(i) In general.
(ii) Anti-avoidance rule.
(4) Paragraphs (b)(1)(iv)(A)(2) through (4), (B) through (G), (b)(22)(iii)(F), and (b)(35).
(a) Overview.
(b) General rule.
(1) In general.
(2) 50 percent ATI limitation for taxable years beginning in 2019 or 2020.
(3) Election to use 2019 ATI in 2020.
(i) In general.
(ii) Short taxable years.
(iii) Transactions to which section 381 applies.
(iv) Consolidated groups.
(4) Time and manner of making or revoking the elections.
(c) Disallowed business interest expense carryforward.
(1) In general.
(2) Coordination with small business exemption.
(3) Cross-references.
(d) Small business exemption.
(1) Exemption.
(2) Application of the gross receipts test.
(i) In general.
(ii) Gross receipts of individuals.
(iii) Partners and S corporation shareholders.
(iv) Tax-exempt organizations.
(3) Determining a syndicate's loss amount.
(e) REMICs.
(f) Trusts.
(i) Calculation of ATI with respect to certain trusts and estates.
(ii) Calculation of ATI with respect to certain beneficiaries.
(g) Tax-exempt organizations.
(h) Examples.
(i) [Reserved]
(j) Anti-avoidance rule.
(1) In general.
(2) Examples.
(k) Applicability dates.
(1) In general.
(2) Paragraphs (b)(3)(iii), (b)(3)(iv), and (d)(3).
(a) Overview.
(b) Coordination of section 163(j) with certain other provisions.
(1) In general.
(2) Disallowed interest provisions.
(3) Deferred interest provisions.
(4) At risk rules, passive activity loss provisions, and limitation on excess business losses of noncorporate taxpayers.
(5) Capitalized interest expenses.
(6) Reductions under section 246A.
(7) Section 381.
(8) Section 382.
(c) Examples.
(d) Applicability date.
(a) Scope.
(b) Characterization of items of income, gain, deduction, or loss.
(1) Interest expense and interest income.
(2) Adjusted taxable income.
(3) Investment interest, investment income, investment expenses, and certain other tax items of a partnership with a C corporation partner.
(i) Characterization as expense or income properly allocable to a trade or business.
(ii) Effect of characterization on partnership.
(iii) Separately stated interest expense and interest income of a partnership not treated as excess business interest expense or excess taxable income of a C corporation partner.
(iv) Treatment of deemed inclusions of a domestic partnership that are not allocable to any trade or business.
(4) Application to RICs and REITs.
(i) In general.
(ii) Tentative taxable income of RICs and REITs.
(iii) Other adjustments to adjusted taxable income for RICs and REITs.
(5) Application to tax-exempt corporations.
(6) Adjusted taxable income of cooperatives.
(7) Examples.
(c) Effect on earnings and profits.
(1) In general.
(2) Special rule for RICs and REITs.
(3) Special rule for partners that are C corporations.
(4) Examples.
(d) Special rules for consolidated groups.
(1) Scope.
(2) Calculation of the section 163(j) limitation for members of a consolidated group.
(i) In general.
(ii) Interest.
(iii) Calculation of business interest expense and business interest income for a consolidated group.
(iv) Calculation of adjusted taxable income.
(v) Treatment of intercompany obligations.
(A) In general.
(B) Repurchase premium.
(3) Investment adjustments.
(4) Examples.
(e) Ownership of partnership interests by members of a consolidated group.
(1) [Reserved]
(2) Change in status of a member.
(3) Basis adjustments under § 1.1502-32.
(4) Excess business interest expense and § 1.1502-36.
(f) Cross-references.
(g) Applicability date.
(1) In general.
(2) [Reserved]
(a) Scope and definitions.
(1) Scope.
(2) Definitions.
(i) Allocable share of the consolidated group's remaining section 163(j) limitation.
(ii) Consolidated group's remaining section 163(j) limitation.
(iii) Remaining current-year interest ratio.
(b) Treatment of disallowed business interest expense carryforwards.
(1) In general.
(2) Deduction of business interest expense.
(3) Consolidated groups.
(i) In general.
(ii) Deduction of business interest expense.
(A) General rule.
(B) Section 163(j) limitation equals or exceeds the current-year business interest expense and disallowed business interest expense carryforwards from prior taxable years.
(C) Current-year business interest expense and disallowed business interest expense carryforwards exceed section 163(j) limitation.
(iii) Departure from group.
(iv) Example: Deduction of interest expense.
(c) Disallowed business interest expense carryforwards in transactions to which section 381(a) applies.
(d) Limitations on disallowed business interest expense carryforwards from separate return limitation years.
(1) General rule.
(A) Cumulative section 163(j) SRLY limitation.
(B) Subgrouping.
(2) Deduction of disallowed business interest expense carryforwards arising in a SRLY.
(3) Examples.
(e) Application of section 382.
(1) Pre-change loss.
(2) Loss corporation.
(3) Ordering rules for utilization of pre-change losses and for absorption of the section 382 limitation.
(4) Disallowed business interest expense from the pre-change period in the year of a testing date.
(5) Recognized built-in loss.
(f) Overlap of SRLY limitation with section 382.
(g) Additional limitations.
(h) Applicability date.
(a) Overview.
(b) Definitions.
(1) Section 163(j) items.
(2) Partner basis items.
(3) Remedial items.
(4) Excess business interest income.
(5) Deductible business interest expense.
(6) Section 163(j) excess items.
(7) Non-excepted assets.
(8) Excepted assets.
(c) Business interest income and business interest expense of the partnership.
(1) Modification of business interest income for partnerships.
(2) Modification of business interest expense for partnerships.
(3) Transition rule.
(4) Character of business interest expense.
(d) Adjusted taxable income of a partnership.
(1) Tentative taxable income of a partnership.
(2) Section 734(b), partner basis items, and remedial items.
(3) Section 743(b) adjustments and publicly traded partnerships.
(4) Modification of adjusted taxable income for partnerships.
(5) Election to use 2019 adjusted taxable income for taxable years beginning in 2020.
(e) Adjusted taxable income and business interest income of partners.
(1) Modification of adjusted taxable income for partners.
(2) Partner basis items and remedial items.
(3) Disposition of partnership interests.
(4) Double counting of business interest income and floor plan financing interest expense prohibited.
(5) Partner basis items, remedial items, and publicly traded partnerships.
(6) [Reserved]
(f) Allocation and determination of section 163(j) excess items made in the same manner as nonseparately stated taxable income or loss of the partnership.
(1) Overview.
(i) In general.
(ii) Relevance solely for purposes of section 163(j).
(iii) Exception applicable to publicly traded partnerships.
(2) Steps for allocating deductible business interest expense and section 163(j) excess items.
(i) Partnership-level calculation required by section 163(j)(4)(A).
(ii) Determination of each partner's relevant section 163(j) items.
(iii) Partner-level comparison of business interest income and business interest expense.
(iv) Matching partnership and aggregate partner excess business interest income.
(v) Remaining business interest expense determination.
(vi) Determination of final allocable ATI.
(A) Positive allocable ATI.
(B) Negative allocable ATI.
(C) Final allocable ATI.
(vii) Partner-level comparison of 30 percent of adjusted taxable income and remaining business interest expense.
(viii) Partner priority right to ATI capacity excess determination.
(ix) Matching partnership and aggregate partner excess taxable income.
(x) Matching partnership and aggregate partner excess business interest expense.
(xi) Final section 163(j) excess item and deductible business interest expense allocation.
(g) Carryforwards.
(1) In general.
(2) Treatment of excess business interest expense allocated to partners.
(3) Excess taxable income and excess business interest income ordering rule.
(4) Special rule for taxable years beginning in 2019 and 2020.
(h) Basis adjustments.
(1) Section 704(d) ordering.
(2) Excess business interest expense basis adjustments.
(3) Partner basis adjustment upon disposition of partnership interest.
(4) -(5) [Reserved]
(i) -(j) [Reserved]
(k) Investment items and certain other items.
(l) S corporations.
(1) In general.
(i) Corporate level limitation.
(ii) Short taxable periods.
(2) Character of deductible business interest expense.
(3) Adjusted taxable income of an S corporation.
(4) Adjusted taxable income and business interest income of S corporation shareholders.
(i) Adjusted taxable income of S corporation shareholders.
(ii) Disposition of S corporation stock.
(iii) Double counting of business interest income and floor plan financing interest expense prohibited.
(iv) [Reserved]
(5) Carryforwards.
(6) Basis adjustments and disallowed business interest expense carryforwards.
(7) Accumulated adjustment accounts.
(8) Termination of qualified subchapter S subsidiary election.
(9) Investment items.
(10) Application of section 382.
(m) Partnerships and S corporations not subject to section 163(j).
(1) Exempt partnerships and S corporations.
(2) Partnerships and S corporations engaged in excepted trades or businesses.
(3) Treatment of excess business interest expense from partnerships that are exempt entities in a succeeding taxable year.
(4) S corporations with disallowed business interest expense carryforwards prior to becoming exempt entities.
(n) Treatment of self-charged lending transactions between partnerships and partners.
(o) Examples.
(p) Applicability dates.
(1) In general.
(2) Paragraphs (c)(1) and (2), (d)(3) through (5), (e)(5), (f)(1)(iii), (g)(4), (n), and (o)(24) through (29), and (34) through (36).
(a) Overview.
(b) General rule regarding the application of section 163(j) to relevant foreign corporations.
(c) Application of section 163(j) to CFC group members of a CFC group.
(1) Scope.
(2) Calculation of section 163(j) limitation for a CFC group for a specified period.
(i) In general.
(ii) Certain transactions between CFC group members disregarded.
(iii) [Reserved]
(iv) [Reserved]
(3) Deduction of business interest expense.
(i) CFC group business interest expense.
(A) In general.
(B) Modifications to relevant terms.
(ii) Carryforwards treated as attributable to the same taxable year.
(iii) Multiple specified taxable years of a CFC group member with respect to a specified period.
(iv) Limitation on pre-group disallowed business interest expense carryforward.
(A) General rule.
(1) CFC group member pre-group disallowed business interest expense carryforward.
(2) Subgrouping.
(3) Transition rule.
(B) Deduction of pre-group disallowed business interest expense carryforwards.
(4) Currency translation.
(5) Special rule for specified periods beginning in 2019 or 2020.
(i) 50 percent ATI limitation applies to a specified period of a CFC group.
(ii) Election to use 2019 ATI applies to a specified period of a CFC group.
(A) In general.
(B) Specified taxable years that do not begin in 2020.
(d) Determination of a specified group and specified group members.
(1) Scope.
(2) Rules for determining a specified group.
(i) Definition of a specified group.
(ii) Indirect ownership.
(iii) Specified group parent.
(iv) Qualified U.S. person.
(v) Stock.
(vi) Options treated as exercised.
(vii) When a specified group ceases to exist.
(3) Rules for determining a specified group member.
(e) Rules and procedures for treating a specified group as a CFC group.
(1) Scope.
(2) CFC group and CFC group member.
(i) CFC group.
(ii) CFC group member.
(3) Duration of a CFC group.
(4) Joining or leaving a CFC group.
(5) Manner of making or revoking a CFC group election.
(i) In general.
(ii) Revocation by election.
(iii) Timing.
(iv) Election statement.
(v) Effect of prior CFC group election.
(6) Annual information reporting.
(f) Treatment of a CFC group member that has ECI.
(1) In general.
(2) [Reserved]
(g) Rules concerning the computation of adjusted taxable income of a relevant foreign corporation.
(1) Tentative taxable income.
(2) Treatment of certain dividends.
(3) Treatment of certain foreign income taxes.
(4) Anti-abuse rule.
(i) In general.
(ii) ATI adjustment amount.
(A) In general.
(B) Special rule for taxable years or specified periods beginning in 2019 or 2020.
(iii) Applicable partnership.
(h) Election to apply safe-harbor.
(1) In general.
(2) Eligibility for safe-harbor election.
(i) Stand-alone applicable CFC.
(ii) CFC group.
(iii) Currency translation.
(3) Eligible amount.
(i) Stand-alone applicable CFC.
(ii) CFC group.
(iii) Additional rules for determining an eligible amount.
(4) Qualified tentative taxable income.
(5) Manner of making a safe-harbor election.
(i) In general.
(ii) Election statement.
(6) Special rule for taxable years or specified periods beginning in 2019 or 2020.
(i) -(j) [Reserved]
(k) Definitions.
(1) Applicable partnership.
(2) Applicable specified taxable year.
(3) ATI adjustment amount.
(4) [Reserved]
(5) [Reserved]
(6) CFC group.
(7) CFC group election.
(8) CFC group member.
(9) [Reserved]
(10) Cumulative section 163(j) pre-group carryforward limitation.
(11) Current group.
(12) Designated U.S. person.
(13) ECI deemed corporation.
(14) Effectively connected income.
(15) Eligible amount.
(16) Former group.
(17) Loss member.
(18) Payment amount.
(19) Pre-group disallowed business interest expense carryforward.
(20) Qualified tentative taxable income.
(21) Qualified U.S. person.
(22) Relevant period.
(23) Safe-harbor election.
(24) Specified borrower.
(25) Specified group.
(26) Specified group member.
(27) Specified group parent.
(28) Specified lender.
(29) Specified period.
(i) In general.
(ii) Short specified period.
(30) Specified taxable year.
(31) Stand-alone applicable CFC.
(32) Stock.
(l) Examples.
(m) Applicability dates.
(1) General applicability date.
(2) Exception.
(3) Early application.
(i) Rules for paragraphs (b) and (g)(1) and (2) of this section.
(ii) Rules for certain other paragraphs in this section.
(4) Additional rules that must be applied consistently.
(5) Election for prior taxable years.
(a) Overview.
(b) Availability of election.
(1) In general.
(2) Special rules.
(i) Exempt small businesses.
(ii) Section 162 trade or business not required for electing real property trade or business.
(c) Scope and effect of election.
(1) In general.
(2) Irrevocability.
(3) Depreciation.
(d) Time and manner of making election.
(1) In general.
(2) Election statement contents.
(3) Consolidated group's trade or business.
(4) Partnership's trade or business.
(e) Termination of election.
(1) In general.
(2) Taxable asset transfer defined.
(3) Related party defined.
(4) Anti-abuse rule.
(f) Additional guidance.
(g) Examples.
(h) Safe harbor for REITs.
(1) In general.
(2) REITs that do not significantly invest in real property financing assets.
(3) REITs that significantly invest in real property financing assets.
(4) REIT real property assets, interests in partnerships, and shares in other REITs.
(i) Real property assets.
(ii) Partnership interests.
(iii) Shares in other REITs.
(A) In general.
(B) Information necessary.
(iv) Tiered entities.
(5) Value of shares in other REITs.
(i) In general.
(ii) Information necessary.
(iii) Tiered REITs.
(6) Real property financing assets.
(7) Application of safe harbor for partnerships controlled by REITS.
(8) REITs or partnerships controlled by REITs that do not apply the safe harbor.
(i) [Reserved]
(j) Special anti-abuse rule for certain real property trades or businesses.
(1) In general.
(2) Exceptions.
(i) De minimis exception.
(ii) Look-through exception.
(iii) Inapplicability of exceptions to consolidated groups.
(iv) Exception for certain REITs.
(3) Allocations.
(4) Examples.
(k) Applicability date.
(a) Overview.
(1) In general.
(i) Purposes.
(ii) Application of section.
(2) Coordination with other rules.
(i) In general.
(ii) Treatment of investment interest, investment income, investment expenses, and certain other tax items of a partnership with a C corporation or tax-exempt corporation as a partner.
(3) Application of allocation rules to foreign corporations and foreign partnerships.
(4) Application of allocation rules to members of a consolidated group.
(i) In general.
(ii) Application of excepted business percentage to members of a consolidated group.
(iii) Basis in assets transferred in an intercompany transaction.
(5) Tax-exempt organizations.
(6) Application of allocation rules to disallowed disqualified interest.
(7) Examples.
(b) Allocation of tax items other than interest expense and interest income.
(1) In general.
(2) Gross income other than dividends and interest income.
(3) Dividends.
(i) Look-through rule.
(ii) Inapplicability of the look-through rule.
(4) Gain or loss from the disposition of non-consolidated C corporation stock, partnership interests, or S corporation stock.
(i) Non-consolidated C corporations.
(ii) Partnerships and S corporations.
(5) Expenses, losses, and other deductions.
(i) Expenses, losses, and other deductions that are definitely related to a trade or business.
(ii) Other deductions.
(6) Treatment of investment items and certain other items of a partnership with a C corporation partner.
(7) Examples: Allocation of income and expense.
(c) Allocating interest expense and interest income that is properly allocable to a trade or business.
(1) General rule.
(i) In general.
(ii) De minimis exception.
(2) Example.
(3) Asset used in more than one trade or business.
(i) General rule.
(ii) Permissible methodologies for allocating asset basis between or among two or more trades or businesses.
(iii) Special rules.
(A) Consistent allocation methodologies.
(1) In general.
(2) Consent to change allocation methodology.
(B) De minimis exception.
(C) Allocations of excepted regulated utility trades or businesses.
(1) In general.
(2) Permissible method for allocating asset basis for utility trades or businesses.
(3) De minimis rule for excepted utility trades or businesses.
(4) Example.
(D) Special allocation rule for real property trades or business subject to special anti-abuse rule.
(1) In general.
(2) Allocation methodology for real property.
(3) Example.
(4) Disallowed business interest expense carryforwards; floor plan financing interest expense.
(5) Additional rules relating to basis.
(i) Calculation of adjusted basis.
(A) Non-depreciable property other than land.
(B) Depreciable property other than inherently permanent structures.
(C) Special rule for land and inherently permanent structures.
(D) Depreciable or amortizable intangible property and depreciable income forecast method property.
(E) Assets not yet used in a trade or business.
(F) Trusts established to fund specific liabilities.
(G) Inherently permanent structure.
(ii) Partnership interests; stock in non-consolidated C corporations.
(A) Partnership interests.
(1) Calculation of asset basis.
(2) Allocation of asset basis.
(i) In general.
(ii) De minimis rule.
(iii) Partnership assets not properly allocable to a trade or business.
(iv) Inapplicability of partnership look-through rule.
(B) Stock in domestic non-consolidated corporations.
(1) In general.
(2) Domestic non-consolidated C corporations.
(i) Allocation of asset basis.
(ii) De minimis rule.
(iii) Inapplicability of corporate look-through rule.
(iv) Use of inside basis for purposes of C corporation look-through rule.
(3) S corporations.
(i) Calculation of asset basis.
(ii) Allocation of asset basis.
(iii) De minimis rule.
(iv) Inapplicability of S corporation look-through rule.
(C) Stock in relevant foreign corporations.
(1) In general.
(2) Special rule for CFC utilities.
(D) Limitations on application of look-through rules.
(1) Inapplicability of look-through rule to partnerships or non-consolidated C corporations to which the small business exemption applies.
(2) Limitation on application of look-through rule to C corporations.
(D) Inapplicability of look-through rule to partnerships or non-consolidated C corporations to which the small business exemption applies.
(E) Tiered entities.
(iii) Cash and cash equivalents and customer receivables.
(iv) Deemed asset sale.
(v) Other adjustments.
(6) Determination dates; determination periods; reporting requirements.
(i) Determination dates and determination periods.
(A) Quarterly determination periods.
(B) Annual determination periods.
(ii) Application of look-through rules.
(iii) Reporting requirements.
(A) Books and records.
(B) Information statement.
(iv) Failure to file statement.
(7) Ownership threshold for look-through rules.
(i) Corporations.
(A) Asset basis.
(B) Dividends.
(ii) Partnerships.
(iii) Inapplicability of look-through rule.
(8) Anti-abuse rule.
(d) Direct allocations.
(1) In general.
(2) Qualified nonrecourse indebtedness.
(3) Assets used in more than one trade or business.
(4) Adjustments to basis of assets to account for direct allocations.
(5) Example: Direct allocation of interest expense.
(e) Examples.
(f) Applicability dates.
(1) In general.
(2) Paragraph (c)(5)(ii)(D)(2).
(a) Overview.
(b) Application of section 163(j) limitation if a corporation joins a consolidated group during a taxable year of the group beginning before January 1, 2018.
(1) In general.
(2) Example
(c) Treatment of disallowed disqualified interest.
(1) In general.
(2) Earnings and profits.
(3) Disallowed disqualified interest of members of an affiliated group.
(i) Scope.
(ii) Allocation of disallowed disqualified interest to members of the affiliated group.
(A) In general.
(B) Definitions.
(1) Allocable share of the affiliated group's disallowed disqualified interest.
(2) Disallowed disqualified interest ratio.
(3) Exempt related person interest expense.
(iii) Treatment of carryforwards.
(4) Application of section 382.
(i) Ownership change occurring before November 13, 2020.
(A) Pre-change loss.
(B) Loss corporation.
(ii) Ownership change occurring on or after November 13, 2020.
(A) Pre-change loss.
(B) Loss corporation.
(5) Treatment of excess limitation from taxable years beginning before January 1, 2018.
(6) Example: Members of an affiliated group.
(d) Applicability date.
Authorizing Statute
-
Rules and regulations26 U.S.C. § 7805
-
Advanced manufacturing production credit26 U.S.C. § 45X
-
Alcohol, etc., used as fuel26 U.S.C. § 40
-
Gross income defined26 U.S.C. § 61
-
Transfers of excess pension assets to retiree health accounts26 U.S.C. § 420
-
Partial exclusion for gain from certain small business stock26 U.S.C. § 1202
-
Tax treatment of stripped bonds26 U.S.C. § 1286
-
Current taxation of income from qualified electing funds26 U.S.C. § 1293
-
Imposition of tax on certain foreign procurement26 U.S.C. § 5000C
-
Returns regarding payments of interest26 U.S.C. § 6049
-
Signing of returns and other documents26 U.S.C. § 6061
-
General requirement of return, statement, or list26 U.S.C. § 6011
-
Income from discharge of indebtedness26 U.S.C. § 108
-
Indian general welfare benefits26 U.S.C. § 139E
-
Bonds must be registered to be tax exempt; other requirements26 U.S.C. § 149
-
Trade or business expenses26 U.S.C. § 162
-
Accelerated cost recovery system26 U.S.C. § 168
-
Amortizable bond premium26 U.S.C. § 171
-
Golden parachute payments26 U.S.C. § 280G
-
Distributions of stock and stock rights26 U.S.C. § 305
-
Transfer to corporation controlled by transferor26 U.S.C. § 351
-
Special rules for long-term contracts26 U.S.C. § 460
-
Determination of basis of partner’s interest26 U.S.C. § 705
-
Taxes of foreign countries and of possessions of United States26 U.S.C. § 901
-
Controlled foreign corporations; United States persons26 U.S.C. § 957
-
New energy efficient home credit26 U.S.C. § 45L
-
2-percent floor on miscellaneous itemized deductions26 U.S.C. § 67
-
Certain death benefits26 U.S.C. § 101
-
Qualified business income26 U.S.C. § 199A
-
Installment method26 U.S.C. § 453
-
Certain payments for the use of property or services26 U.S.C. § 467
-
Partners, not partnership, subject to tax26 U.S.C. § 701
-
Extent of recognition of gain or loss on distribution26 U.S.C. § 731
-
Capitalization of certain policy acquisition expenses26 U.S.C. § 848
-
Special rules for determining source26 U.S.C. § 863
-
Income of foreign governments and of international organizations26 U.S.C. § 892
-
Definitions and special rules26 U.S.C. § 6241
-
Computation and payment of tax26 U.S.C. § 1503
-
Adjusted gross income defined26 U.S.C. § 62
-
Treatment of loans with below-market interest rates26 U.S.C. § 7872
-
Basis to distributees26 U.S.C. § 358
-
Minimum participation standards26 U.S.C. § 410
-
Other definitions and special rules26 U.S.C. § 860G
-
Adjustments required by changes in method of accounting26 U.S.C. § 481
-
Definitions26 U.S.C. § 7701
-
Insurance income26 U.S.C. § 953
-
Returns relating to actions affecting basis of specified securities26 U.S.C. § 6045B
-
Information relating to certain trusts and annuity plans26 U.S.C. § 6047
-
Enhanced oil recovery credit26 U.S.C. § 43
-
Energy efficient commercial buildings deduction26 U.S.C. § 179D
-
Redemption through use of related corporations26 U.S.C. § 304
-
Certain stock purchases treated as asset acquisitions26 U.S.C. § 338
-
Special limitations on certain excess credits, etc.26 U.S.C. § 383
-
Optional treatment of elective deferrals as Roth contributions26 U.S.C. § 402A
-
General rule for taxable year of inclusion26 U.S.C. § 451
-
Qualified ABLE programs26 U.S.C. § 529A
-
Charitable remainder trusts26 U.S.C. § 664
-
Nonrecognition of gain or loss on contribution26 U.S.C. § 721
-
Investment of earnings in United States property26 U.S.C. § 956
-
Definitions and special rule26 U.S.C. § 1377
-
Relief from joint and several liability on joint return26 U.S.C. § 6015
-
Return of S corporation26 U.S.C. § 6037
-
Notice of certain transfers to foreign persons26 U.S.C. § 6038B
-
Information at source26 U.S.C. § 6041
-
Imposition of accuracy-related penalty on underpayments26 U.S.C. § 6662
-
Tax imposed26 U.S.C. § 1
-
Railroad track maintenance credit26 U.S.C. § 45G
-
Zero-emission nuclear power production credit26 U.S.C. § 45U
-
Rehabilitation credit26 U.S.C. § 47
-
Clean electricity investment credit26 U.S.C. § 48E
-
Special rules26 U.S.C. § 52
-
Election to expense certain depreciable business assets26 U.S.C. § 179
-
Individual retirement accounts26 U.S.C. § 408
-
Special rules for nondealers26 U.S.C. § 453A
-
Deductions limited to amount at risk26 U.S.C. § 465
-
Exemption from tax on corporations, certain trusts, etc.26 U.S.C. § 501
-
Definition of regulated investment company26 U.S.C. § 851
-
Source rules for personal property sales26 U.S.C. § 865
-
Tax on nonresident alien individuals26 U.S.C. § 871
-
Foreign base company income26 U.S.C. § 954
-
S corporation defined26 U.S.C. § 1361
-
Definitions26 U.S.C. § 1402
-
Distributions of property26 U.S.C. § 301
-
Life insurance contract defined26 U.S.C. § 7702
-
Previously-owned clean vehicles26 U.S.C. § 25E
-
Electricity produced from certain renewable resources, etc.26 U.S.C. § 45
-
Clean fuel production credit26 U.S.C. § 45Z
-
Taxation of employee annuities26 U.S.C. § 403
-
Last-in, first-out inventories26 U.S.C. § 472
-
Allocation of income and deductions among taxpayers26 U.S.C. § 482
-
Definitions applicable to subparts A, B, C, and D26 U.S.C. § 643
-
Taxable years of partner and partnership26 U.S.C. § 706
-
Disposition of investment in United States real property26 U.S.C. § 897
-
Administrative adjustment request by partnership26 U.S.C. § 6227
-
Citizens or residents of the United States living abroad26 U.S.C. § 911
-
Residence and source rules involving possessions26 U.S.C. § 937
-
Rules relating to expatriated entities and their foreign parents26 U.S.C. § 7874
-
Regulations26 U.S.C. § 1502
-
Capitalization and inclusion in inventory costs of certain expenses26 U.S.C. § 263A
-
Foreign corporations26 U.S.C. § 367
-
Roth IRAs26 U.S.C. § 408A
-
Minimum vesting standards26 U.S.C. § 411
-
Partner’s distributive share26 U.S.C. § 704
-
Unrealized receivables and inventory items26 U.S.C. § 751
-
Taxation of residual interests26 U.S.C. § 860C
-
Exclusions from gross income26 U.S.C. § 883
-
Income affected by treaty26 U.S.C. § 894
-
Other definitions and special rules26 U.S.C. § 989
-
Special rules26 U.S.C. § 1474
-
Returns of brokers26 U.S.C. § 6045
-
Information returns of tax return preparers26 U.S.C. § 6060
-
Authority to make credits or refunds26 U.S.C. § 6402
-
Failure by individual to pay estimated income tax26 U.S.C. § 6654
-
Interest on certain home mortgages26 U.S.C. § 25
-
Credit for qualified commercial clean vehicles26 U.S.C. § 45W
-
Interest on State and local bonds26 U.S.C. § 103
-
Qualified lessee construction allowances for short-term leases26 U.S.C. § 110
-
Losses26 U.S.C. § 165
-
Charitable, etc., contributions and gifts26 U.S.C. § 170
-
Incentive stock options26 U.S.C. § 422
-
Deemed paid credit for subpart F inclusions26 U.S.C. § 960
-
Election of mark to market for marketable stock26 U.S.C. § 1296
-
Returns relating to certain life insurance contract transactions26 U.S.C. § 6050Y
-
Clean vehicle credit26 U.S.C. § 30D
-
Credit for carbon oxide sequestration26 U.S.C. § 45Q
-
Amount of credit26 U.S.C. § 46
-
Advanced manufacturing investment credit26 U.S.C. § 48D
-
Arbitrage26 U.S.C. § 148
-
Amortization of goodwill and certain other intangibles26 U.S.C. § 197
-
Interest on education loans26 U.S.C. § 221
-
Disallowance of certain entertainment, etc., expenses26 U.S.C. § 274
-
Qualifications for tax credit employee stock ownership plans26 U.S.C. § 409
-
Unrelated debt-financed income26 U.S.C. § 514
-
Rules for allocation of basis26 U.S.C. § 755
-
Rules for certain reserves26 U.S.C. § 807
-
Special rules in case of foreign oil and gas income26 U.S.C. § 907
-
Basis of property acquired from a decedent26 U.S.C. § 1014
-
Special rules26 U.S.C. § 1298
-
Definitions26 U.S.C. § 3401
-
Extension of time for filing returns26 U.S.C. § 6081
-
Renumbered § 45C]26 U.S.C. § 28
-
Credit for production of clean hydrogen26 U.S.C. § 45V
-
Energy credit26 U.S.C. § 48
-
Limitation on credit26 U.S.C. § 904
-
Qualified pension, profit-sharing, and stock bonus plans26 U.S.C. § 401
-
Dependent care assistance programs26 U.S.C. § 129
-
Special rules for nuclear decommissioning costs26 U.S.C. § 468A
-
Mark to market accounting method for dealers in securities26 U.S.C. § 475
-
Basis of distributed property other than money26 U.S.C. § 732
-
Straddles26 U.S.C. § 1092
-
Qualified electing fund26 U.S.C. § 1295
-
Averaging of farm income26 U.S.C. § 1301
-
Withholdable payments to foreign financial institutions26 U.S.C. § 1471
-
Definitions26 U.S.C. § 1504
-
Basis information to persons acquiring property from decedent26 U.S.C. § 6035
-
Information with respect to certain foreign-owned corporations26 U.S.C. § 6038A
-
Returns relating to cash received in trade or business, etc.26 U.S.C. § 6050I
-
Credit for increasing research activities26 U.S.C. § 41
-
Definitions and special rules26 U.S.C. § 150
-
Passive activity losses and credits limited26 U.S.C. § 469
-
Certain expenses for which credits are allowable26 U.S.C. § 280C
-
Assumption of liability26 U.S.C. § 357
-
Complete liquidations of subsidiaries26 U.S.C. § 332
-
Distribution of stock and securities of a controlled corporation26 U.S.C. § 355
-
Period for computation of taxable income26 U.S.C. § 441
-
General rule for taxable year of deduction26 U.S.C. § 461
-
Special rules for modified guaranteed contracts26 U.S.C. § 817A
-
Treatment of variable contracts26 U.S.C. § 817
-
Certain reinsurance agreements26 U.S.C. § 845
-
Failure to file notice of redetermination of foreign tax26 U.S.C. § 6689
-
Branch transactions26 U.S.C. § 987
-
Qualified zone property defined26 U.S.C. § 1397D
-
Withholdable payments to other foreign entities26 U.S.C. § 1472
-
Liquidating, etc., transactions26 U.S.C. § 6043
-
Verification of returns26 U.S.C. § 6065
-
Mode or time of collection26 U.S.C. § 6302
-
Transfer of certain credits26 U.S.C. § 6418
-
American Opportunity and Lifetime Learning credits26 U.S.C. § 25A
-
Refundable credit for coverage under a qualified health plan26 U.S.C. § 36B
-
Clean electricity production credit26 U.S.C. § 45Y
-
Other special rules26 U.S.C. § 50
-
Treatment of community income26 U.S.C. § 66
-
Basis to corporations26 U.S.C. § 362
-
Election of taxable year other than required taxable year26 U.S.C. § 444
-
Transactions between partner and partnership26 U.S.C. § 707
-
Special allocation rules for certain asset acquisitions26 U.S.C. § 1060
-
Discounted unpaid losses defined26 U.S.C. § 846
-
Definitions and special rules26 U.S.C. § 864
-
Capital asset defined26 U.S.C. § 1221
-
Interest on tax deferral26 U.S.C. § 1291
-
Passive foreign investment company26 U.S.C. § 1297
-
Withholding of tax on nonresident aliens26 U.S.C. § 1441
-
Returns as to interests in foreign partnerships26 U.S.C. § 6046A
-
State and local income tax refunds26 U.S.C. § 6050E
-
Returns relating to exchanges of certain partnership interests26 U.S.C. § 6050K
-
Returns relating to higher education tuition and related expenses26 U.S.C. § 6050S
-
Reporting of health insurance coverage26 U.S.C. § 6055
-
Low-income housing credit26 U.S.C. § 42
-
New markets tax credit26 U.S.C. § 45D
-
Definitions and special rules26 U.S.C. § 414
-
Qualified asset account; limitation on additions to account26 U.S.C. § 419A
-
General rule for methods of accounting26 U.S.C. § 446
-
Interest on certain deferred payments26 U.S.C. § 483
-
Reserves for losses on loans of banks26 U.S.C. § 585
-
Certain revocable trusts treated as part of estate26 U.S.C. § 645
-
Insurance company taxable income26 U.S.C. § 832
-
Income from sources within the United States26 U.S.C. § 861
-
Treatment of certain foreign currency transactions26 U.S.C. § 988
-
Functional currency26 U.S.C. § 985
-
Other definitions and special rules26 U.S.C. § 1275
-
Election to extend time for payment of tax on undistributed earnings26 U.S.C. § 1294
-
Requirement to maintain minimum essential coverage26 U.S.C. § 5000A
-
Returns by exempt organizations26 U.S.C. § 6033
-
Information with respect to foreign financial assets26 U.S.C. § 6038D
-
Returns relating to the cancellation of indebtedness by certain entities26 U.S.C. § 6050P
-
Identifying numbers26 U.S.C. § 6109
-
Elective payment of applicable credits26 U.S.C. § 6417
-
Certain fringe benefits26 U.S.C. § 132
-
Dependent defined26 U.S.C. § 152
-
Interest26 U.S.C. § 163
-
Bad debts26 U.S.C. § 166
-
Special rules for credits and deductions26 U.S.C. § 642
-
General rule for inventories26 U.S.C. § 471
-
Political organizations26 U.S.C. § 527
-
Special rules applicable to sections 661 and 66226 U.S.C. § 663
-
Allowance of deductions and credits26 U.S.C. § 874
-
Branch profits tax26 U.S.C. § 884
-
Tax imposed on certain built-in gains26 U.S.C. § 1374
-
Foreign tax-exempt organizations26 U.S.C. § 1443
-
Valuation tables26 U.S.C. § 7520
-
Losses on small business stock26 U.S.C. § 1244
-
Distributions26 U.S.C. § 1368
-
Definitions26 U.S.C. § 1473
-
Information with respect to certain fines, penalties, and other amounts26 U.S.C. § 6050X
-
Failure by corporation to pay estimated income tax26 U.S.C. § 6655