PDF document

- 1 -

Userid: CPM Schema: instrx Leadpct: 100% Pt. size: 9 Draft Ok to Print
AH XSL/XML Fileid: … ns/i8990/202212/a/xml/cycle08/source (Init. & Date) _______

Page 1 of 17 9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Department of the Treasury
Internal Revenue Service
Instructions for Form 8990

(Rev. December 2022)
Limitation on Business Interest Expense Under Section 163(j)

Section references are to the Internal Revenue provide certain information so that the
Code unless otherwise noted. Who Must File
A taxpayer (including, for example, an partner or shareholder can complete their
individual, corporation, partnership, S return. See Ownership of pass-through
Future Developments corporation) with business interest entities not subject to the section 163(j)
For the latest information about expense; a disallowed business interest limitation, later.
developments related to Form 8990 and expense carryforward; or current year or
its instructions, such as legislation prior year excess business interest Coordination With Other
enacted after they were published, go to expense must generally file Form 8990, Limitations
IRS.gov/Form8990. unless an exclusion from filing applies.
Categorization and allocation of inter-
A pass-through entity allocating excess est expense. Current year interest
What’s New taxable income or excess business expense must be categorized under
Change in adjusted taxable income interest income to its owners must file Temporary Regulations section 1.163-8T
(ATI) computation. For tax years Form 8990, regardless of whether it has (for example, as investment interest,
beginning after 2021, the computation for any interest expense. personal interest, or business interest)
before computing the section 163(j)
ATI is computed with the deductions for A regulated investment company that limitation on the deduction for business
depreciation, amortization, and depletion. pays section 163(j) interest dividends (see interest expense. Also, see Proposed
Do not add back the deductions for Regulations sections 1.163(j)-1(b)(22)(iii) Regulations section 1.163-14 ((85 FR
depreciation, amortization, or depletion (F) and 1.163(j)-1(b)(35)) must file Form 56846) (2020 Proposed Regulations) for
attributable to a trade or business. 8990. rules on allocating interest expense
New worksheet. A new worksheet has A taxpayer that is a U.S. shareholder of associated with debt proceeds for
been added to the instructions. Worksheet an applicable controlled foreign pass-through entities. Only business
C is used to determine eligibility for the corporation (CFC) that has business interest expense is subject to the section
safe-harbor election under Regulations interest expense, disallowed business 163(j) limitation.
section 1.163(j)-7(h). See Worksheet interest expense carryforward, or is part of For purposes of the section 163(j)
C—Stand-Alone Applicable CFC/CFC a CFC group must generally apply section limitation only, business interest expense
Group Safe Harbor Election, later. 163(j) to the applicable CFC and attach a refers to interest expense properly
Form 8990 with each Form 5471. See allocable to trades or businesses that are
General Instructions Regulations section 1.163(j)-7(b). not excepted trades or businesses. See
Taxpayers with both excepted and
For a CFC group, an additional Form non-excepted trades or businesses, later,
Purpose of Form 8990 must be filed for the CFC group to for allocating interest expense between
Use Form 8990 to figure the amount of report the combined limitations of all CFC excepted and non-excepted trades or
business interest expense you can deduct group members. See Specified Group businesses before computing the section
and the amount to carry forward to the Parent, later. 163(j) limitation.
next year. For more information, see
Regulations sections 1.163(j)-1 through If a safe-harbor election is made for a Interest expense limitations. An
1.163(j)-11. CFC group, Form 8990 does not need to expense that has been disallowed,
be filed for each CFC group member, but deferred, or capitalized in the current tax
Computation of section 163(j) limita- Form 8990 must be filed for the CFC year, or which has not yet been accrued,
tion. If section 163(j) applies to you, the group. is not taken into account for section 163(j)
business interest expense deduction
allowed for the tax year is limited to the Exclusions from filing. A taxpayer is not purposes. Section 163(j) applies after any
sum of: required to file Form 8990 if the taxpayer basis limitation and before the operation of
is a small business taxpayer and does not the at-risk, passive activity loss, or excess
1. Business interest income, have excess business interest expense business loss limitations. See Regulations
2. Applicable percentage of the from a partnership. A taxpayer is also not section 1.163(j)-3 for additional
adjusted taxable income (ATI), and required to file Form 8990 if it only has information on interactions of section
3. Floor plan financing interest interest expense from one or more of 163(j) with other code provisions relating
expense. these excepted trades or businesses: to interest expense.
• The trade or business of providing If a taxpayer’s deduction for business
Carryforward of disallowed business services as an employee, interest expense is limited under section
interest. The amount of any business • An electing real property trade or 163(j) and such taxpayer has more than
interest expense that is not allowed as a business, one business activity for purposes of
deduction under section 163(j) for the tax • An electing farming business, or either the at-risk (section 465) or passive
year is carried forward to the following • Certain regulated utility businesses. activity loss (section 469) limitation
year as a disallowed business interest If a pass-through entity is not required provisions, then the section 163(j)
expense carryforward. However, see to file Form 8990 because it is a small limitation will apply to the overall business
Special Rules for partnership treatment of business taxpayer, but a partner or interest expense from all the business
disallowed business interest expense, shareholder is required to file Form 8990, activities of the taxpayer. The proportion of
later. the pass-through entity is required, upon each activity’s business interest expense
request by the partner or shareholder, to that is disallowed is the same proportion

Jan 23, 2023 Cat. No. 71420E

- 2 -

Page 2 of 17 Fileid: … ns/i8990/202212/a/xml/cycle08/source 9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

as the disallowed business interest receipts, in proportion to the partner’s Also see FAQs Regarding the
expense over the total business interest distributive share of items of gross income Aggregation Rules at IRS.gov.
expense. See Regulations section or S corporation’s shareholder’s pro rata
Tax shelter election. A taxpayer that is a
1.163(j)-3(c) example 4 and Temporary share of gross receipts, unless the partner
tax shelter as defined in section 448(d)(3)
Regulations section 1.163-8T. and partnership, or S corporation
is not permitted to use the small business
shareholder and S corporation, are treated
Partner basis limitations. Deductible exemptions contained in section 163(j)(3).
as a single person. In that case, see Gross
business interest expense and excess Under section 448(d)(3), a taxpayer that is
receipts aggregation for members of a
business interest expense are subject to a “syndicate” is considered to be a tax
controlled group, businesses under
section 704(d) loss limitation rules. See shelter. To determine whether a taxpayer
common control, or members of an
Regulations section 1.163(j)-6(h)(1) and is a syndicate, the section 448 regulations
affiliated group, later.
(2). permit a taxpayer to make an annual
The gross receipts of an organization election to use its allocations of income,
Definitions subject to tax under section 511 only gain, loss, or deduction made in the
include gross receipts taken into account immediately preceding tax year, instead of
The definitions below are only for the in determining its unrelated business using its current year allocations. The
purposes of applying section 163(j). taxable income. election is made on a timely filed original
Small business taxpayer. A small return (including extensions) for the tax
business taxpayer is not subject to the Note. Gross receipts must meet the year for which it is made. It is only valid for
section 163(j) limitation and is generally definition under section 448(c) and that tax year and once made cannot be
not required to file Form 8990. Temporary Regulations section revoked. See Regulations section
A small business taxpayer is a taxpayer 1.448-1T(f)(2)(iv). 1.448-2(b)(2)(iii)(B)(2) for guidance on the
that is not a tax shelter (as defined in Any reference to your business gross time and manner of making the annual
section 448(d)(3)) and meets the gross receipts also includes a reference to the election.
receipts test, described below. A tax gross receipts of any predecessor of your
Excepted trade or business. A trade or
shelter is defined as: business. If your business was not in
business does not include:
• Any enterprise other than a C existence for the entire 3-year period,
corporation offering ownership via base your average annual gross receipts • Performing services as an employee,
registered securities, on the period your business existed. Also, • An electing real property trade or
business,
• Any syndicate within the meaning of if your business had a tax year of less than
section 1256(e)(3)(B) (see Regulations 12 months, your gross receipts must be • An electing farming business, or
section 1.163(j)-2(d)(3)), or annualized by multiplying the gross • Certain regulated utility businesses.
• Any entity described in section 6662(d) receipts for the short period by 12 and How to make an election and the effect
(2)(C)(ii). dividing the result by the number of of being an excepted trade or business
A pass-through entity that is a small months in the short period. are discussed under Special Rules, later.
business taxpayer does not allocate The prior period gross receipts must be Electing real property trade or busi-
excess taxable income, excess business annualized for any short period before ness. A real property trade or business
interest income, or excess business dividing by 3. engaged in activities described in section
interest to its owners. For assistance in preparing the 469(c)(7) may elect to not be subject to
Gross receipts test. A taxpayer meets average annual gross receipts, see the the section 163(j) limitation. See Elections
the gross receipts test if the taxpayer has Average Annual Gross Receipts under Special Rules, later, for the effect of
average annual gross receipts of $27 Worksheet Per Section 448(c), later. making an election. Real property trade or
business means any real property
million or less for the 3 prior tax years. Gross receipts aggregation for development, redevelopment,
A taxpayer's average annual gross members of a controlled group, construction, reconstruction, acquisition,
receipts for the 3 prior tax years is businesses under common control, or conversion, rental, operation,
determined by: members of an affiliated group. For management, leasing, or brokerage trade
1. Adding the gross receipts for the 3 section 163(j), gross receipts may include or business.
prior tax years, and the receipts of more than one taxpayer.
For this purpose, all members of a Electing farming business. Farming
2. Dividing the total by 3. controlled group of corporations (as businesses (as defined in section 263A(e)
In the case of any taxpayer, which is defined in section 52(a)), and all members (4)) and specified agricultural and
not a corporation or a partnership, and of a group of businesses under common horticultural cooperatives (as defined in
except as provided below, the gross control (as defined in section 52(b)), are section 199A(g)(4)) may elect to not be
receipts test is applied in the same treated as a single person; and all subject to the section 163(j) limitation. See
manner as if such taxpayer were a members of an affiliated service group (as Elections under Special Rules, later, for
corporation or a partnership. defined in sections 414(m) and (o)) shall the effect of making an election. A farming
be treated as a single person. If you and a business includes livestock, dairy, poultry,
Gross receipts for any tax year must be partnership or S corporation in which you fish, fruit, nut, and truck farms. It also
reduced by returns and allowances made hold an interest are treated as a single includes plantations, ranches, ranges, and
during the year. For individuals and for person for purposes of the gross receipts orchards. A fish farm is an area where fish
section 163(j) only, gross receipts do not test, aggregate the partnership’s or S and other marine animals are grown or
include inherently personal amounts such corporation’s gross receipts with your raised and artificially fed, protected, etc.,
as disability benefits, social security gross receipts. Do not duplicate amounts but it does not include an area where they
benefits, and wages received as an by also including a share of partnership or are merely caught or harvested. A plant
employee and reported on Form W-2. S corporation gross receipts as your own nursery is a farm for purposes of
For section 163(j), a taxpayer with an gross receipts. deducting soil and water conservation
expenses.
ownership interest in a partnership or S For more information, see Average
corporation must include a share of the Annual Gross Receipts Worksheet Per A specified agricultural or horticultural
partnership’s or S corporation’s gross Section 448(c), later. cooperative is a cooperative to which Part

-2-

- 3 -

Page 3 of 17 Fileid: … ns/i8990/202212/a/xml/cycle08/source 9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

I of subchapter T of the Internal Revenue Business interest income does not include interest, such as sections 263A and 267,
Code applies that manufactures, investment income. as well as basis, at-risk and passive
produces, grows, or extracts any See C corporation business interest activity loss limitations.
agricultural or horticultural product, or has expense and income, later. Any additions or subtractions from
marketed agricultural or horticultural
products. Interest income that is allocable to an ! taxable income in arriving at ATI
excepted trade or business is not treated CAUTION are limited to the amount by which
Certain regulated utility businesses. as business interest income. the item affects taxable income.
Certain regulated utility trades or
businesses are not subject to the section Business interest expense. Business Applicable percentage. The applicable
163(j) limitation. No election is required for interest expense means any interest paid percentage is the percentage applied to
certain regulated utility businesses, or accrued that is properly allocable to a ATI for purposes of computing the
meaning these trades or businesses are trade or business. Business interest business interest expense limitation
automatically excepted from the limitation. expense, generally, does not include calculation. The applicable percentage is
investment interest or other personal 30% (30% ATI limitation).
Automatically excepted regulated interest. See Temporary Regulations
utilities are trades or businesses that section 1.163-9T for a definition of Floor plan financing interest expense.
furnish or sell: personal interest. However, see C Floor plan financing interest expense is
• Electrical energy, water, or sewage corporation business interest expense and not subject to the section 163(j) limitation.
disposal services; income, later. Floor plan financing interest expense is
• Gas or steam through a local interest on debt used to finance the
distribution system; or Interest expense that is allocable to an
• Transportation of gas or steam by excepted trade or business is not treated acquisition of motor vehicles held for sale
pipeline. as business interest expense. or lease where the debt is secured by the
acquired inventory.
To be an automatically excepted Excess business interest expense. If a
regulated utility trade or business, the partnership has a limitation on business Excess taxable income. In general,
rates for furnishing or sale of the above interest expense, the disallowed business excess taxable income is the amount of a
listed items must be established or interest expense is not carried over by the partnership’s or S corporation’s ATI that is
approved by a state or political subdivision partnership, but is allocated to the in excess of the amount of ATI required to
thereof, by any agency or instrumentality partners. This interest is referred to as support the partnership’s or S
of the United States, by a public service or excess business interest expense. corporation’s business interest expense
deduction. This amount is computed by a
public utility commission or other similar Tentative taxable income Tentative partnership or an S corporation and is
body of any state or political subdivision taxable income is generally the same as allocated to the partner or shareholder.
thereof, on a rate of return and cost of taxable income under section 63. This amount is used by the partner or
service basis, or by the governing or However, tentative taxable income is shareholder in determining their current
rate-making body of an electric computed as if the section 163(j) limitation year ATI.
cooperative. does not exist; therefore, do not include
If the trade or business does not qualify disallowed business interest expense Excess business interest income.
as an automatically excepted regulated carryforwards from a prior year or excess Excess business interest income is the
utility trade or business because its rates business interest expense from a prior amount by which current year business
are not established or approved on a cost year. interest income exceeds current year
business interest expense (excluding floor
of service and rate of return basis, the See Regulations section 1.163(j)-1(b) plan financing). This amount is computed
taxpayer may be able to elect that the (43) for more information. by a partnership or an S corporation and is
trade or business be an excepted trade or
business. See Regulations section Adjusted taxable income (ATI). ATI allocated to the partner or shareholder.
1.163(j)-1(b)(15)(iii)(A) regarding electing means tentative taxable income of the This amount is used by the partner or
utility trades or businesses. Also, see taxpayer computed without regard to: shareholder in determining their current
Elections under Special Rules, later, for • Any item of income, gain, deduction, or year business interest income.
the effect of making an election. loss, which is not properly allocable to a
trade or business (within the meaning of Special Rules
Interest. In general, interest is any section 162);
Elections. A taxpayer engaged in a real
amount that is paid, received, or accrued • Any business interest income or
property trade or business, a farming
as compensation for the use or business interest expense;
business, or a non-automatically excepted
forbearance of money or that is treated as • The amount of any net operating loss
regulated utility trade or business may
interest under the Internal Revenue Code deduction under section 172;
elect not to limit business interest expense
or the regulations thereunder. • The amount of any qualified business
under section 163(j) for such trade or
Regulations section 1.163(j)-1(b)(22) income allowed under section 199A (for
business. This is an irrevocable election.
provides additional guidance on what purposes of determining ATI the section
constitutes interest for purposes of section 199A deduction is determined without If the real property trade or business or
163(j), including anti-avoidance rules and regard to section 163(j). See Regulations farming business election is in effect, you
a list of other amounts treated as interest, section 1.163(j)-1(b)(43)); are required to use the alternative
such as certain amounts of bond premium, • For tax years beginning before 2022, depreciation system (ADS) for certain
factoring income, and section 163(j) any deduction for depreciation, property. See Pub. 946, How To
interest dividends from regulated amortization, or depletion attributable to a Depreciate Property. Also, you are not
investment companies. trade or business; and entitled to the special depreciation
Business interest income. Business • Adjustments described in published allowance for that property. For a taxpayer
guidance. with more than one qualifying business,
interest income means the amount of the election is made with respect to each
interest income includible in the taxpayer’s To determine ATI, tentative taxable
trade or business.
gross income for the tax year, which is income is computed after applying other
properly allocable to a trade or business. sections limiting the deductibility of

-3-

- 4 -

Page 4 of 17      Fileid: … ns/i8990/202212/a/xml/cycle08/source                                         9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Electing real property trade or busi-         1.163(j)-1(b)(15)(iii) (as an electing utility Self-charged interest. See Regulations 
ness. An electing real property trade or      trade or business), as applicable.             section 1.163(j)-6(n) for the treatment of 
business must use the ADS for any             Consolidated group’s trade or busi-            business interest income and business 
nonresidential real property, residential     ness. Only the name and taxpayer               interest expense with respect to lending 
rental property, and qualified improvement    identification number (TIN) of the agent for   transactions between a partnership and a 
property used in its trade or business.       the group, as defined in Regulations           partner.
Revenue Procedure 2021-9.        Revenue      section 1.1502-77, must be provided on         Partner. A partner’s excess business 
Procedure 2021-9 provides a safe harbor       the election statement.                        interest expense is treated as paid or 
that allows a taxpayer engaged in a trade     Partnership’s trade or business.    An         accrued by the partner in subsequent 
or business that manages or operates a        election for a partnership must be made        years to the extent the partner is allocated 
residential living facility that provides     on the partnership’s return with respect to    current year excess taxable income or 
certain supplemental assistive, nursing,      any trade or business that the partnership     excess business interest income from the 
and other routine medical services to treat   conducts. An election by a partnership         same partnership.
such trade or business as a real property     does not apply to a trade or business            If a partner not subject to the section 
trade or business. See Revenue                conducted by a partner outside the             163(j) limitation has excess business 
Procedure 2021-9 for additional               partnership.                                   interest expense from a prior year and is 
information and requirements to qualify for                                                  allocated excess taxable income or 
the safe harbor.                              Taxpayers with both excepted and 
                                              non-excepted trades or businesses.             excess business interest income in the 
Electing farming business. An electing        Taxpayers must allocate and apportion          current year, the partner would file Form 
farming business must use the ADS for         their interest expense, interest income,       8990 and the amount of excess business 
any farming property the taxpayer owns        and other tax items between excepted and       interest expense treated as paid or 
with a recovery period of 10 years or         non-excepted trades or businesses,             accrued in the current year would not be 
more.                                         applying the rules under Regulations           subject to further limitation under section 
Regulated utility trade or business.          section 1.163(j)-10. An asset basis            163(j). See Schedule A, Summary of 
Automatically excepted utility trades or      approach is generally used to allocate         Partner’s Section 163(j) Excess Items, 
businesses and electing utility trades or     interest expense and interest income.          later.
businesses cannot claim the additional        Regulations section 1.163(j)-10(c)               A partner subject to the section 163(j) 
first-year depreciation deduction under       requires a taxpayer to attach a statement      limitation will include the amount of excess 
section 168(k) for any property that is       to its timely filed tax return, providing      business interest expense treated as paid 
primarily used in the excepted regulated      information related to the asset basis and     or accrued in figuring its current year 
utility trade or business.                    allocation determination, as provided, in      business interest expense limitation.
                                              Regulations section 1.163(j)-10(c)(6)(iii).      If both a partnership and a partner are 
Safe harbor for real estate investment                                                       subject to the section 163(j) limitation, the 
trusts (REITs).  Under certain                Partnerships. If a partnership is subject 
circumstances, a REIT (and a partnership      to the section 163(j) limitation, the section  partner’s current year business interest 
controlled by one or more REITs) is           163(j) limitation is applied at the            expense limitation computation will 
eligible to make an election to be a real     partnership level. If a partnership has        include the following amounts from each 
property trade or business. See               deductible business interest expense,          of its partnerships:
Regulations section 1.163(j)-9(h).            such deductible business interest expense      • Current year excess taxable income,
                                              is not subject to any further limitation       • Excess business interest expense 
How to make the election.  To make an         under section 163(j) at the partner level.     treated as paid or accrued, and
election for a real property, farming, or     For all other purposes of the Code,            • Current year excess business interest 
non-automatically excepted regulated          however, deductible business interest          income.
utility trade or business, attach an election expense retains its character as business        These amounts will not include items 
statement to a timely filed original tax      interest expense at the partner level.         from an excepted trade or business.
return (including extensions). Once the 
                                              If the partnership has a limitation on           If a partner is subject to the section 
election is made, it is irrevocable.
                                              business interest expense, the disallowed      163(j) limitation and the partnership is not, 
  The statement must be titled “Section       business interest expense (excess              see Ownership of pass-through entities 
1.163(j)-9 Election” (for real property or    business interest expense) is not carried      not subject to the section 163(j) limitation, 
farming businesses) or “Section               over by the partnership, but is allocated to   later.
1.163(j)-1(b)(15)(iii) Election” (for an      the partners.                                    In the event a partner sells a 
electing utility trade or business), and 
                                              After completing Form 8990, the                partnership interest and the partnership in 
must contain the following information for 
                                              partnership must determine how the             which the interest is being sold owns only 
each electing trade or business:
                                              deductible business interest expense,          non-excepted trade or business assets, 
• The taxpayer’s name;
                                              excess business interest expense, excess       the gain or loss on the sale of the 
• The taxpayer’s address;
                                              taxable income, and excess business            partnership interest is included in the 
• The taxpayer’s social security number 
                                              interest income are allocated among the        partner’s ATI. If the partnership interest 
(SSN) or employer identification number 
                                              partners. Worksheet A—Determination of         consists of both excepted and 
(EIN);
                                              Each Partner's Deductible Business             non-excepted assets, the partner may use 
• A description of the taxpayer’s electing 
                                              Interest Expense and Section 163(j)            the method set forth in Regulations 
trade or business, sufficient to 
                                              Excess Items and Worksheet                     section 1.163(j)-10(c) to determine the 
demonstrate qualification for an election, 
                                              B—Determination of Each Partner's              amount properly allocable to a 
including the principal business activity 
                                              Relevant Section 163(j) Items are to be        non-excepted trade or business and, 
code; and
                                              used to determine the amount of each           therefore, properly includible in the 
• A statement that the taxpayer is making 
                                              item allocable to each partner. See            partner’s ATI.
an election pursuant to section 163(j)(7)
                                              Regulations section 1.163(j)-6(f)(2) for 
(B) (as an electing real property trade or                                                   Excess business interest expense 
                                              additional information on the allocation.
business) or (C) (as an electing farming                                                     from a prior tax year that was suspen-
business), or Regulations section                                                            ded under section 704(d) (“negative 

                                                               -4-

- 5 -

Page 5 of 17          Fileid: … ns/i8990/202212/a/xml/cycle08/source                        9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

section 163(j) expense”).   See              expenses that a partnership pays,              activity and partners that do not materially 
Regulations section 1.163(j)-6(h) for basis  receives, or accrues and allocates to a C      participate. Only the portion of the interest 
adjustment calculations and ordering rules   corporation partner as a separately stated     expense that is allocable to the materially 
for losses under section 704(d).             item is treated by the C corporation as        participating partners is subject to 
                                             properly allocable to a trade or business of   limitation under section 163(j) at the 
Excess business interest expense in 
                                             that partner. Similarly, for purposes of       partnership level. In addition, the trading 
tiered partnerships. See 2020 
                                             section 163(j), any other tax items of a       partnership is required to bifurcate all of its 
Proposed Regulations section 1.163(j)-6(j) 
                                             partnership that are neither properly          other items of income, gain, loss, and 
for treatment of excess business interest 
                                             allocable to a trade or business of the        deduction from its trading activity allocable 
expense in tiered partnerships.
                                             partnership nor described in section           to the partners that do not materially 
S corporation.  The section 163(j)           163(d) and that are allocated to a C           participate. Such items are not taken into 
limitation is applied at the S corporation   corporation partner as separately stated       account at the partnership level as items 
level. Disallowed business interest          items, are treated as properly allocable to    from a trade or business for section 163(j), 
expense is carried over by the S             a trade or business of that partner. See       but instead are treated as items from an 
corporation and is treated as business       Regulations section 1.163(j)-4(b)(3)(i).       investment activity of the partnership.
interest expense paid or accrued in the      Current year business interest expense         Foreign persons with effectively con-
following year.                              is deducted before disallowed business         nected income (ECI). A nonresident 
  For a shareholder subject to the section   interest expense carryforwards, which are      alien individual or foreign corporation that 
163(j) limitation, the shareholder’s current then deducted in the order of the year in      is not a relevant foreign corporation and 
year section 163(j) limitation computation   which they were incurred, starting with the    that has ECI is also subject to the section 
will include the following amounts from      earliest year, subject to certain limitations. 163(j) limitation. As foreign persons are 
each of its S corporations:                                                                 only taxed on their ECI, ATI, business 
                                             Consolidated group.     A consolidated 
• Current year excess taxable income,                                                       interest expense, business interest 
                                             group has a single section 163(j) 
and                                                                                         income, and floor plan financing interest 
                                             limitation. A consolidated group files one 
• Current year excess business interest                                                     expense are modified to limit such 
                                             Form 8990. For members entering or 
income.                                                                                     amounts to income which is ECI and 
                                             leaving the group, see Regulations section 
  These amounts will not include items       1.163(j)-5 for applicable limitations.         expenses properly allocable to ECI. A 
from an excepted trade or business.                                                         relevant foreign corporation means any 
                                             Intercompany obligations.       All            foreign corporation whose classification is 
Ownership of pass-through entities           intercompany obligations, as defined in        relevant under Regulations section 
not subject to the section 163(j) limita-    Regulations section 1.1502-13(g)(2)(ii),       301.7701-3(d)(1) for a tax year, other than 
tion. If you are subject to the section      are disregarded for purposes of                solely pursuant to sections 881 or 882.
163(j) limitation and are an owner of a      determining a member’s business interest       Before applying section 163(j), a 
pass-through entity that is not subject to   expense and business interest income           foreign corporation that has ECI must first 
the section 163(j) limitation, your share of and in figuring the consolidated group’s       determine its business interest expense 
the pass-through business interest           ATI.                                           allocable to ECI under Regulations section 
expense is not subject to the section 
163(j) limitation, and your share of         Tax-exempt corporations with unrela-           1.882-5. Business interest expense 
non-excepted trade or business items of      ted business income (UBI). The rule for        allocable to ECI is reported on Schedule I 
income, gain, loss, and deduction            C corporation interest expense and             (Form 1120-F). Disallowed business 
(including business interest expense and     income applies to a corporation that is        interest expense carryforward, as 
business interest income) of such            subject to the unrelated business income       determined under section 163(j), that was 
pass-through entity, if net positive, is     tax under section 511 only with respect to     allocable to ECI in a prior year but 
included on line 13. You must request the    that corporation’s items of income, gain,      deductible in the current tax year and any 
pass-through entity to separately state, in  deduction, or loss that are taken into         current year ECI business interest 
sufficient detail, the items necessary to    account in computing the corporation’s         expense that becomes disallowed 
include on line 13.                          unrelated business taxable income, as          business interest expense carryforward, 
                                             defined in section 512.                        after applying section 163(j), are also 
  In the event a partnership allocates                                                      included on Schedule I (Form 1120-F).
excess business interest expense to one      Regulated investment companies 
or more of its partners, and in a later tax  (RICs) and real estate investment              Relevant foreign corporations.       Section 
year the partnership is an exempt entity,    trusts (REITs). For special rules for          163(j) generally applies to determine the 
the excess business interest expense         determining ATI for RICs and REITs, see        deductibility of a relevant foreign 
from the prior year is treated as business   Regulations section 1.163(j)-4(b)(4). For a    corporation’s business interest expense 
interest expense paid or accrued by the      safe harbor for REITs (and partnerships        for purposes of computing its taxable 
partner in the later year. See Regulations   controlled by one or more REITs) making        income (determined under Regulations 
section 1.163(j)-6(m)(3).                    an election to be an electing real property    section 1.952-2 or the rules of section 
                                             trade or business, see Regulations section     882) in the same manner as it applies to 
C corporation business interest ex-                                                         determine the deductibility of a domestic C 
                                             1.163(j)-9(h).
pense and income.   Solely for section                                                      corporation’s business interest expense 
163(j), all interest paid or accrued (or     Trading partnerships.   A trading              for purposes of computing its taxable 
treated as paid or accrued) by a C           partnership is a partnership engaged in a      income. An applicable CFC means a 
corporation is business interest expense,    trade or business activity of trading          foreign corporation described in section 
and all interest includible in gross income  personal property (including marketable        957, but only if the foreign corporation has 
by a C corporation is business interest      securities) for the account of owners of       at least one U.S. shareholder that owns 
income, except to the extent such interest   interests in the activity, as described in     (within the meaning of section 958(a)) 
expense or interest income is allocable to   Temporary Regulations section                  stock of the foreign corporation.
an excepted trade or business.               1.469-1T(e)(6). A trading partnership is 
  Any investment interest expense,           required to bifurcate its interest expense     CFC group election.  In order to make a 
investment interest income, or investment    from a trading activity between partners       CFC group election under Regulations 
                                             that materially participate in the trading     section 1.163(j)-7(e), each designated 

                                                             -5-

- 6 -

Page 6 of 17 Fileid: … ns/i8990/202212/a/xml/cycle08/source 9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

U.S. person (as defined in Regulations Form 8990 must be filed for the CFC made. See Regulations section
section 1.163(j)-7(k)(12)) must attach the group in order to report the combined 1.163(j)-7(e)(5)(ii).
election statement described in limitation of the CFC group. The CFC
Specified group parent. A specified
Regulations section 1.163(j)-7(e)(5)(iv) to group's Form 8990 must be filed by the
group parent means a qualified U.S.
the CFC group’s Form 8990 in the year the specified group parent, if the specified
person or an applicable CFC. A qualified
CFC group election is made. The group parent is a qualified U.S. person. If
U.S. person means a United States
statement must include the name and the specified group parent is a CFC, the
person described in section 7701(a)(30)
taxpayer identification number of all U.S. shareholders that file Form 5471 for
(A) or (C). Members of a consolidated
designated U.S. persons, a statement that the specified group parent must file the
group that file (or that are required to file) a
the CFC group election is being made, the CFC group's Form 8990 with Form 5471
consolidated U.S. federal income tax
specified period (as defined in of the specified group parent. In addition, if
return are treated as a single qualified
Regulations section 1.163(j)-7(k)(29)) for a U.S. shareholder that files Form 5471 for
U.S. person, and individuals described in
which the CFC group election is being a CFC group member is not the specified
section 7701(a)(30)(A) whose filing status
made, the name of each CFC group group parent and does not file Form 5471
is married filing jointly are treated as a
member, and its specified tax year with for the specified group parent, the CFC
single qualified U.S. person.
respect to the specified period. If a CFC group's Form 8990 should be attached to
group election was previously revoked, such U.S. shareholder's tax return. Designated U.S. person. With respect
the statement must include a certification On the CFC group's Form 8990, line 1 to a specified group, a designated U.S.
that the specified period for which the through line 25 should be completed by person means either the specified group
election is made did not begin before 60 adding together the individual amounts parent (if the specified group parent is a
months following the last day of the reported by each CFC group member on a qualified U.S. person) or each controlling
specified period for which the election was separate entity basis. However, for domestic shareholder (see Regulations
revoked. See Regulations section purposes of determining ATI of a CFC section 1.964-1(c)(5)(i)) of the specified
1.163(j)-7(e)(5)(ii). group, the limitation that ATI cannot be group parent (if the specified group parent
If a CFC group election is in effect, a less than zero applies with respect to the is an applicable CFC). With respect to a
single section 163(j) limitation is computed ATI of the CFC group but not the ATI of stand-alone applicable CFC, each
for a specified period of a CFC group. A any CFC group member. Line 26 through controlling domestic shareholder of the
CFC group sums each of its CFC group line 31 of Form 8990 should be completed stand-alone applicable CFC is a
member’s separate-company applicable by reference to the total amounts reported designated U.S. person.
amounts for a specified period. Items of a on line 1 through line 25. Each designated Safe-harbor election. If a safe-harbor
CFC group member are translated into a U.S. person should attach a statement election is in effect with respect to a tax
single currency (which may be the U.S. identifying the specified group parent, the year of a stand-alone applicable CFC or a
dollar or the functional currency of a specified period, and the name and specified tax year of a CFC group
plurality of the CFC group members) for specified tax year of each CFC group member, then, for such year, no portion of
the CFC group and back to the functional member. the applicable CFC's business interest
currency of the CFC group member using On the CFC group’s Form 8990, enter expense is disallowed under the section
the average exchange rate for the CFC “Specified Group Parent” as the name of 163(j) limitation. See instructions to
group member’s specified tax year (as the foreign entity on line A. Enter zeros for Worksheet C, and complete Worksheet C
defined in Regulations section the foreign entity’s EIN number. Do not before completing Part I.
1.163(j)-7(k)(30)), using any reasonable complete Schedule A or Schedule B of the If the safe-harbor election is made for a
method, consistently applied. Only CFC group's Form 8990. stand-alone applicable CFC, the U.S.
non-ECI amounts are included in the CFC shareholders that file Form 8990 for the
group calculation. A separate section Compliance with these instructions
163(j) calculation and Form 8990 must be satisfies the statement requirement under stand-alone applicable CFC must attach
filed for the ECI of a CFC group member, if Regulations section 1.163(j)-7(e)(5)(iv) Worksheet C to their tax return together
any. The CFC group member’s ECI and the annual information reporting with the Form 8990 of the stand-alone
attributes are treated, for this purpose, as requirement under Regulations section applicable CFC and complete Part I of the
attributes of a separate applicable CFC. 1.163(j)-7(e)(6). stand-alone applicable CFC's Form 8990
in accordance with the instructions to
Form 8990 for each CFC group mem- Revocation of CFC group election. In Worksheet C. Check the "Yes" box on line
ber. When a CFC group election is in order to revoke a CFC group election, D of the stand-alone applicable CFC's
effect, the U.S. shareholders of each CFC each designated U.S. person must attach Form 8990.
group member must file Form 8990 with the statement described in Regulations
Form 5471 for each CFC group member section 1.163(j)-7(e)(5)(iv) to the Form If the safe-harbor election is made for a
on a separate entity basis (unless a 8990 that is filed by or on behalf of the CFC group, the U.S. shareholders that file
safe-harbor election is in effect for the specified group parent. The statement the CFC group's Form 8990 must attach
CFC group). On each CFC group must include the name and taxpayer Worksheet C to their tax return together
member’s Form 8990, report the individual identification number of all designated with the CFC group's Form 8990 and
CFC group member’s amounts on line 1 U.S. persons, a statement that the CFC complete Part I of the CFC group's Form
through line 25. Do not complete line 26 group election is being revoked, the name 8990 in accordance with the instructions
through line 29 and report the CFC group of the specified group parent, the to Worksheet C. Check the "Yes" box on
member’s current-year business interest specified period for which the election is line D of the CFC group's Form 8990.
expense deduction and disallowed revoked, and the name and specified tax A safe-harbor election is valid only if
business interest expense (as determined year of each specified group member. The made by each designated U.S. person.
under Regulations section 1.163(j)-7(c) statement must also include a certification The requirement to file the election
(3)) on lines 30 and 31. that the specified period for which the statement described in Regulations
election is revoked did not begin before 60 section 1.163(j)-7(h)(5)(ii) is satisfied by
Additional Form 8990 for CFC group. months following the last day of the attaching Worksheet C in compliance with
In addition to the Form 8990 that is filed for specified period for which the election was these instructions.
each CFC group member, a separate

-6-

- 7 -

Page 7 of 17          Fileid: … ns/i8990/202212/a/xml/cycle08/source                                    9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

The safe-harbor election is available if      inclusion of an amount by a U.S. 
a CFC group’s (or stand-alone applicable      shareholder (as defined in section 951(b))      Specific Instructions
CFC’s) business interest expense is equal     in gross income under sections 78, 
to or less than either (a) its business       951(a), or 951A(a) with respect to an           If Form 8990 relates to an information 
interest income or (b) 30% of the lesser of   applicable CFC that is properly allocable       return for a foreign entity (for example, 
(i) its qualified tentative taxable income    to a non-excepted trade or business. A          Form 5471), provide the foreign entity 
(QTTI) or (ii) its eligible amount. See       specified deemed inclusion also includes        name and appropriate identification 
Regulations section 1.163(j)-7(h)(3). A       any amount included in a domestic               number on line A.
CFC group is not eligible for the             partnership’s gross income under sections       If the foreign entity is a CFC group 
safe-harbor election if any CFC group         951(a) or 951A(a) with respect to an            member or if this Form 8990 is being filed 
member has a pre-group disallowed             applicable CFC to the extent such               by or on behalf of the specified group 
business interest expense carryforward.       amounts are attributable to investment          parent to report the combined limitation of 
See Regulations section 1.163(j)-7(k)(19)     income of the partnership and are               the CFC group, check the "Yes" box and 
for the specified period. See Regulations     allocated to a domestic C corporation that      see CFC group election, earlier, for 
section 1.163(j)-7(h)(2). See the             is a direct (or indirect) partner and treated   additional requirements when making a 
instructions for Worksheet C for additional   as properly allocable to a non-excepted         CFC group election. One of those 
information.                                  trade or business of the domestic C             additional requirements is that a separate 
The safe-harbor does not apply to             corporation.                                    Form 8990 must be completed in order to 
excess business interest expense, as          Section 1.163(j)-7(j) of the 2020               report the combined limitation of the CFC 
described in Regulations section              Proposed Regulations does, however,             group.
1.163(j)-6(f)(2), until the tax year in which allow a U.S. shareholder to add to its          If a safe-harbor election is being made, 
it is treated as paid or accrued by an        tentative taxable income a portion of its       check the "Yes" box and see Safe-harbor 
applicable CFC under Regulations section      specified deemed inclusions that are            election, earlier, and Worksheet C, 
1.163(j)-6(g)(2)(i). Excess business          attributable to either a stand-alone            Stand-Alone Applicable CFC/CFC Group 
interest expense is not taken into account    applicable CFC or a CFC group member,           Safe Harbor Election, later, for additional 
for purposes of this election until a tax     except to the extent attributable to an         requirements when making a safe-harbor 
year in which it is treated as paid or        inclusion under section 78 with respect to      election and special instructions for 
accrued by an applicable CFC under            an applicable CFC, provided the                 completing Part I. If a safe-harbor election 
Regulations section 1.163(j)-6(g)(2)(i).      applicable requirements are met. That           is made, Schedules A and B should not be 
See Regulations section 1.163(j)-7(h) for     portion is equal to the ratio of the            completed.
full election rules.                          applicable CFC’s CFC excess taxable 
                                              income over its ATI.
Limitation on pre-group disallowed                                                            Part I—Computation of 
business interest expense carryfor-           Change in ATI computation. After                Allowable Business 
ward. The amount of the pre-group             2021, ATI is computed with deductions for 
disallowed business interest expense          depreciation, amortization, depletion, and      Interest Expense
carryforwards that may be included in any     any other deduction prescribed in               Complete Part I to determine your 
CFC group member’s business interest          published guidance. Do not add back the         allowable business interest expense 
expense deduction for any specified tax       deductions for depreciation, amortization,      deduction.
year may not exceed the aggregate             or depletion attributable to a trade or         If you are a taxpayer that owns an 
section 163(j) limitation for all specified   business after 2021.                            interest in a partnership subject to the 
periods of the CFC group, determined by                                                       section 163(j) limitation, see the 
                                              Change from being subject to section 
reference only to the CFC group                                                               instructions for Schedule A before 
                                              163(j) to being exempt from section 
member’s items of income, gain,                                                               completing Part I.
                                              163(j) under the small business ex-
deduction, and loss, and reduced 
                                              emption. A taxpayer that has disallowed 
(including below zero) by the CFC group                                                       If you are a taxpayer that is a 
                                              business interest expense from a prior 
member’s business interest expense                                                            shareholder in an S corporation subject to 
                                              year and meets the small business 
(including disallowed business interest                                                       the section 163(j) limitation, see the 
                                              exemption in the current year is no longer 
expense carryforwards) taken into                                                             instructions for Schedule B before 
                                              required to limit their business interest 
account as a deduction by the CFC group                                                       completing Part I.
                                              expense for section 163(j) purposes.
member in all specified tax years in which                                                    If you are a regulated investment 
the CFC group member has continuously         Similarly, a partner with excess 
been a CFC group member of the CFC            business interest expense from a                company that paid section 163(j) interest 
group (cumulative section 163(j)              partnership is not required to limit such       dividends and that has no business 
pre-group carryforward limitation). See       excess business interest expense under          interest expense for the tax year, complete 
Regulations section 1.163(j)-7(c)(3)(iv).     section 163(j) if the partnership meets the     only Sections I and III.
                                              small business exemption in the current         Prepare the form in U.S. dollars.
U.S. shareholder of an applicable CFC.        year and the partner also meets the small 
A U.S. shareholder of an applicable CFC,      business exemption in the current year.         Section I—Business 
in order to arrive at ATI, must reduce its 
tentative taxable income, by, among other     Change from non-excepted trade or               Interest Expense (Lines 1 
items, an amount equal to the sum of any      business to excepted trade or busi-
specified deemed inclusions that were         ness. If a taxpayer has disallowed              Through 5)
included in the computation of the            business interest expense from a prior          Line 1. Current year business interest 
taxpayer’s tentative taxable income,          year, or excess business interest expense       expense.  Enter the business interest 
reduced by the portion of the deduction       from a partnership, for which an election to    expense (not including floor plan financing 
allowed under section 250(a) by reason of     be an excepted trade or business is made        interest expense or disallowed business 
the specified deemed inclusions. See          in the current year, then the disallowed        interest expense carryforwards from prior 
Regulations section 1.163(j)-1(b)(1)(ii)(G).  business interest expense carried forward,      years) that would have been deductible in 
A specified deemed inclusion means the        or excess business interest expense, is         the current year without the application of 
                                              still subject to the section 163(j) limitation. section 163(j).

                                                                  -7-

- 8 -

Page 8 of 17 Fileid: … ns/i8990/202212/a/xml/cycle08/source 9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Interest expense from an excepted 1366), at-risk (section 465) and passive interest expense, to the extent includable
trade or business should not be included. activity loss (section 469), and excess in tentative taxable income, that is not
See Ownership of pass-through entities business loss (section 461(l)) limitations from a pass-through entity. For section
not subject to the section 163(j) limitation, prior to inputting the tentative taxable 163(j), business interest expense does not
earlier. income amount. include interest from an excepted trade or
Do not include interest expense The tentative taxable income of a business.
allocated by a trading partnership to a partnership or S corporation shall include
partner that does not materially both separately and non-separately stated Note. Interest expense that is allocable to
participate. See Trading partnerships, items. For a partnership, this will generally an excepted trade or business is not
earlier. be the amount on Form 1065, Analysis of treated as business interest expense.
Net Income (Loss), line 1, Net income Line 9. Amount of any net operating
For C corporations with an interest in a (loss), less guaranteed payments, loss deduction under section 172.
partnership, any investment interest Schedule K, line 4c. If adjustments to a Enter the amount of any net operating loss
expense allocated to the C corporation is partnership's income or deductions deduction carried forward or carried back
treated as business interest expense of resulting from section 743(b) basis to the current tax year under section 172.
the C corporation from a non-excepted adjustments are taken into account in
trade or business. calculating a partnership's net income Line 10. Amount of any qualified busi-
Line 2. Disallowed business interest (loss), remove the effects of those ness income deduction allowed under
expense carryforwards from prior adjustments by adding or subtracting the section 199A. Enter the amount of any
years. Enter the prior year disallowed income, gain, loss, or deduction resulting qualified business income deduction
business interest expense carryover. See from the section 743(b) basis adjustments. allowed under section 199A. To determine
Form 8990, line 31, for prior year amount. For an S corporation, this will generally be ATI, the section 199A deduction on line 10
For consolidated groups with members the amount on Form 1120-S, Schedule K, is determined without regard to section
joining or leaving the group, see line 18, Income/loss reconciliation. 163(j). See Regulations section
1.163(j)-1(b)(43).
Regulations section 1.163(j)-5, as To compute a partnership's and
limitations may apply. partner's ATI, the partnership (not the Line 11. Reserved for future use.
partner) takes into account items resulting Reserved for future use.
Line 2 does not apply to from adjustments to property under Line 12. Amount of any loss or deduc-
! partnerships. section 734(b). See Regulations section tion items from a pass-through entity.
CAUTION
1.163(j)-6(d)(2). However, to compute ATI Enter any amount of loss or deduction
If Form 8990 is being completed for an or items resulting from adjustments to items from pass-through entities
applicable CFC with a functional currency property under section 743(b), the partner (regardless of whether the entity is subject
other than the U.S. dollar, and the amount (not the partnership) takes into account to the section 163(j) limitation).
reported on line 2 is different from the such items.
amount reported on line 31 of the prior Line 13. Other additions. Enter the
year Form 8990 due to the use of different These adjustments are entered on amount of any capital loss carryback or
translation rates for translating from line 13 (or line 20) of Form 8990. carryover.
functional currency to U.S. dollars in Additions (Lines 7 Through 16) A taxpayer subject to the section 163(j)
different years, attach a statement Add back to tentative taxable income limitation who has an interest in a
providing the amount of the disallowed certain adjustments to arrive at ATI. Do pass-through entity not subject to the
business interest expense carryover in not include amounts that were not taken section 163(j) limitation should include
functional currency and the translation rate into account in tentative taxable income on their share of the entity’s ATI in other
used in the current year and the prior year. line 6. See Adjusted taxable income (ATI), additions. See Ownership of pass-through
In the case of a CFC group member, a earlier. entities not subject to the section 163(j)
single statement may be attached to the limitation, earlier.
CFC group's Form 8990 for all CFC group Line 7. Any item of loss or deduction
members in lieu of separate statements which is not properly allocable to a A C corporation should include
for each CFC group member. trade or business of the taxpayer. investment income from a pass-through
Enter any item of loss or deduction that is entity and any other tax items of a
Line 4. Floor plan financing interest not properly allocable to a trade or partnership that are neither properly
expense. Enter the current year floor plan business of the taxpayer, including the allocable to a trade or business of the
financing interest expense. taxpayer’s loss or deduction from any partnership nor described in section
excepted trades or businesses. The 163(d) and that are allocated to a C
Section II—Adjusted amount of the addition is limited to the corporation partner as separately stated
Taxable Income (Lines 6 amount the additional item affected items as other additions. See C
tentative taxable income. corporation business interest expense and
Through 22) income, earlier.
Enter all numbers as positive amounts For example, a personal casualty loss
unless otherwise indicated. is not allocable to a trade or business of a For trusts and estates subject to
taxpayer, which would be entered on section 163(j), add back the amount of any
Tentative Taxable Income line 7 as a positive amount to the extent income distribution deduction under
the casualty loss offset tentative taxable sections 651 and 661, and the deduction
Line 6. Tentative taxable income. Enter income. under section 642(c).
tentative taxable income computed as The ATI of a beneficiary (including a
though all of the business interest Do not include amounts from
expense is otherwise allowable business pass-through entities, which are entered tax-exempt beneficiary) of a trust or a
interest expense. In figuring tentative on line 12. decedent's estate is reduced by any
income (including any distributable net
taxable income, consider all other Line 8. Any business interest expense income) received from the trust or estate
applicable limitations such as sections not from a pass-through entity. Add to by the beneficiary to the extent such
163(f), 267, basis (sections 704 and tentative taxable income all business income was necessary to permit a

-8-

- 9 -

Page 9 of 17 Fileid: … ns/i8990/202212/a/xml/cycle08/source 9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

deduction under section 163(j)(1)(B) and Line 20. Other reductions. Include floor Section IV—163(j)
Regulations section 1.163(j)-2(b) for any plan financing interest expense. Limitation Calculations
business interest expense of the trust or
estate that was in excess of any business For tax years beginning in 2022, ATI is
interest income of the trust or estate. computed with deductions for (Lines 26 Through 31)
depreciation, amortization, depletion, and Limitation on Business Interest
A U.S. shareholder of an applicable any other deduction prescribed in Expense
CFC should include the amount added to published guidance.
the U.S. shareholder's tentative taxable Line 26. Applicable percentage of ATI
income under 2020 Proposed Regulations If you are filing Form 8990 for an
section 1.163(j)-7(j). Separately list each applicable CFC, include the amount of any limitation. Multiply the ATI from line 22
inclusion by stand-alone applicable CFC related party dividend income. See by the applicable percentage. The
or CFC group member. Regulations section 1.163(j)-7(g)(2). applicable percentage is 30% (30% ATI
limitation).
A relevant foreign corporation should A U.S. shareholder of an applicable
include the amount of any deduction for CFC should include an amount equal to For a partnership or S corporation, if
foreign income tax (as defined in the sum of any specified deemed line 26 is zero, enter -0- on lines 35 and
Regulations section 1.960-1(b)) that was inclusions that were included in the 40.
included in computing tentative taxable computation of the taxpayer's tentative Allowable Interest Expense
income on line 6 since foreign income taxable income, reduced by the portion of
taxes should not reduce ATI. See the deduction allowed under section Line 30. Total current year business
Regulations section 1.163(j)-7(g)(3). 250(a) by reason of the specified deemed interest expense deduction. A taxpayer
inclusions. See Regulations section subject to the section 163(j) limitation will
Also include any other additions 1.163(j)-1(b)(1)(ii)(G). Separately list each enter on line 30 the smaller of line 29 or
described in published guidance. If none, reduction by stand-alone applicable CFC line 5. Line 30 is the amount of current
leave blank. or CFC group member. year business interest expense deduction
Line 15. Total current year S corpora- Also include any other reductions allowed after considering the section
tion shareholder’s excess taxable in- described in published guidance. If none, 163(j) limitation.
come. Enter the amount of any S leave blank. If a partner is not subject to the section
corporation excess taxable income A C corporation should include 163(j) limitation and has partnership
reported on Schedule B, line 46, column investment expenses from a pass-through excess business interest expense treated
(c). entity and other tax items of a partnership as paid or accrued in the current year,
Reductions (Lines 17 Through that are neither properly allocable to a enter the amount from Schedule A,
trade or business of the partnership nor line 44, column (h). The amount will not be
21) described in section 163(d) and that are subject to further limitation under section
Subtract from tentative taxable income allocated to a C corporation partner as 163(j).
certain adjustments to arrive at ATI. Do separately stated items as other If the amount on line 29 is less than the
not include amounts that were not taken reductions. See C corporation business amount on line 5 and business interest
into account in tentative taxable income on interest expense and income, earlier. expense is reported on more than one
line 6. See ATI, defined earlier. location on the return (such as ordinary
Line 22. Adjusted taxable income business interest expense and farming
Line 17. Any item of income or gain (ATI). If line 22 is zero or less, enter zero. interest expense), then the disallowed
which is not properly allocable to a However, CFC group members should business interest expense must be
trade or business of the taxpayer. follow instructions below. allocated to each source in proportion to
Enter any item of income or gain, which is
not properly allocable to a trade or CFC group members. If a CFC group the total amount of business interest
business of the taxpayer, including the member has a negative amount of ATI, the expense from each source. Attach a
taxpayer’s income or gain from any CFC group member should report the schedule to Form 8990 that indicates the
excepted trade(s) or business(es). negative amount on line 22. See amount and line item on the tax return
Regulations section 1.163(j)-7(c)(2)(i). where the business interest expense is
For example, gain from the sale of a being deducted.
taxpayer's personal residence would be
entered on line 17 because it is not gain Section III—Business Carryforward
that is allocable to a trade or business of Interest Income (Lines 23 Line 31. Disallowed business interest
the taxpayer.
Through 25) expense. Subtract line 29 from line 5. If
Do not include amounts from zero or less, enter -0-.
pass-through entities, which will be Line 23. Current year business interest
entered on line 19. income. Enter the amount of business Note. The amount on line 31 is used on
interest income directly paid to or accrued the taxpayer’s next year’s Form 8990,
Line 18. Any business interest income by the taxpayer. This does not include line 2 (except for partnerships). If the
not from a pass-through entity. Enter interest income from excepted trades or taxpayer completing this form is a
all business interest income, to the extent businesses. partnership, carry the amount on line 31 to
included in tentative taxable income on
For C corporations with an interest in a
line 6, that is not from a pass-through Part II, line 32, of the current year Form
partnership, any investment interest
entity (regardless of whether the entity is 8990.
income allocated to the C corporation is
subject to the section 163(j) limitation).
treated as business interest income of the Part II—Partnership
Line 19. Amount of any income or gain C corporation from a non-excepted trade
items from a pass-through entity. or business. Pass-Through Items
Enter the amount of any income or gain See Ownership of pass-through entities Part II is completed by a partnership that is
items from pass-through entities. not subject to the section 163(j) limitation, subject to section 163(j) and is required to
earlier. file Form 8990. The partnership items are

-9-

- 10 -

Page 10 of 17            Fileid: … ns/i8990/202212/a/xml/cycle08/source                                   9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

allocated to the partners and are not         business interest expense, and attach a         Line 44, column (h). Total excess busi-
carried forward by the partnership.           statement to the Form 8990 identifying the      ness interest expense treated as paid 
                                              partnership name and amount of negative         or accrued. For the partners subject to 
See the Instructions for Form 1065 for        163(j) expense. See Regulations section         the section 163(j) limitation, add the 
how the partnership reports the excess        163(j)-6(h).                                    amounts entered on line 43, column (h), 
business interest expense, excess taxable 
income, and excess business interest          Line 43, column (d). Prior year carry-          for all partnerships listed. Enter this total 
income to the partners.                       forward. From the prior year’s Form             amount on Part I, line 3. For partners not 
                                              8990, enter the amount from line 43,            subject to the section 163(j) limitation, 
See Ownership of pass-through entities        column (i). Increase the prior year             include this amount on Part I, line 30.
not subject to the section 163(j) limitation, carryover by the amount of negative 
earlier.                                      section 163(j) expense that is no longer        Schedule B—Summary of 
                                              suspended, or if applicable, reduce the         S Corporation 
Part III—S Corporation                        prior year excess business interest 
Pass-Through Items                            expense by the amount of negative               Shareholder’s Excess 
Part III is completed by an S corporation     section 163(j) expense that relates to the      Taxable Income and 
that is subject to the section 163(j)         prior year excess business interest 
limitation. The S corporation’s excess        expense. Attach a statement to the Form         Excess Business Interest 
taxable income and excess business            8990 identifying the partnership name and       Income
interest income are allocated to the          a description of the adjustments and the        Any taxpayer that is required to complete 
shareholders pro rata after the S             amounts. See Regulations section                Part I and is a shareholder in an S 
corporation’s section 163(j) limitation is    1.163(j)-6(h).                                  corporation that is subject to the section 
determined and are not carried forward by     Line 43, column (h). Excess business            163(j) limitation must complete 
the S corporation.                            interest expense treated as paid or ac-         Schedule B before completing Part I.
See the Instructions for Form 1120-S          crued. Enter the lesser of:                     On line 45, enter the amount of current 
for how to report the excess taxable          • The total excess business interest            year excess taxable income in column (c) 
income and the excess business interest       expense amount in column (e), or                and current year excess business interest 
income to the shareholders.                   • The current year excess taxable               income in column (d), reported to the 
                                              income in column (f) plus the current year      shareholder on Schedule K-1 for each S 
                                              excess business interest income in              corporation.
Schedule A—Summary of                         column (g) from the same partnership.
                                                                                              Line 46, column (c). Total current year 
Partner’s Section 163(j)                        In addition, add any of the applicable        excess taxable income.    Add the 
Excess Items                                  amounts listed below, and attach a              amounts entered on line 45, column (c), 
Any taxpayer that is required to complete     statement to the Form 8990 identifying the      for all S corporations listed. Enter this total 
Part I and is a partner in a partnership that partnership name, amount, and                   amount on Part I, line 15.
is subject to the section 163(j) limitation   description of addition.
must complete Schedule A before               • The amount of excess business interest        Line 46, column (d). Total current year 
completing Part I. For a foreign person       expense carryover on line 43(d) if the          excess business interest income.       Add 
that is not a relevant foreign corporation    partnership became an exempt entity             the amounts entered on line 45, column 
with an interest in a partnership engaged     during the tax year. See Regulations            (d), for all S corporations listed. Combine 
in a U.S. trade or business, the amount of    section 1.163(j)-6(m)(3).                       this total amount with Schedule A, line 44, 
excess items is limited to ECI. For such      • Any business interest expense that is         column (g) and enter the total on Part I, 
foreign partners, report on Schedule A        treated in the current tax year, as paid or     line 24.
only the ECI portion of the excess section    accrued under the transition rule of 
163(j) amounts and attach a statement         regulation for trading partnerships. See        Worksheet 
showing how the ECI portion of the excess     Regulations section 1.163(j)-6(c)(3).           A—Determination of Each 
section 163(j) amounts were determined.       Line 43, column (i). Current year ex-           Partner's Deductible 
See 2020 Proposed Regulations section         cess business interest expense carry-
1.163(j)-8(c) for additional information.     forward. Columns 43(e) minus (h), less          Business Interest Expense 
On line 43, enter the amount of current       any excess business interest expense that       and Section 163(j) Excess 
year excess business interest expense in      previously reduced partner basis that you       Items and Worksheet 
column (c), current year excess taxable       are required to make a basis adjustment 
income in column (f), and the current year    to upon disposition of partnership interest.    B—Determination of Each 
excess business interest income in            See Regulations section 1.163(j)-6(h)(3).       Partner's Relevant Section 
column (g), reported to the partner on        Line 44, column (f). Total current year         163(j) Items
Schedule K-1 for each partnership.            excess taxable income.        If the partner is The Regulations provide guidance 
Do not include excess business                subject to the section 163(j) limitation, add   regarding how a partnership subject to the 
interest expense that is suspended under      the amounts entered on line 43, column          section 163(j) limitation must allocate its 
the basis limitation rules of section 704(d). (f), for all partnerships listed. Enter this    deductible business interest expense and 
See Regulations section 1.163(j)-6(h) for     total amount on Part I, line 14.                section 163(j) excess items, if any, among 
basis adjustment calculations and             Line 44, column (g). Total current year         its partners. The Regulations provide that 
ordering rules for losses under section       excess business interest income.      For       deductible business interest expense and 
704(d).                                       the partners subject to the section 163(j)      section 163(j) excess items must be 
Line 43, column (c). Current year.            limitation, add the amounts entered on          allocated in accordance with the 11-step 
Reduce the current year excess business       line 43, column (g), for all partnerships       computation shown in Worksheets A and 
interest expense by the amount of             listed. Combine this total amount with          B. See Regulations section 1.163(j)-6(f). 
negative section 163(j) expense that          Schedule B, line 46, column (d) and enter       The partnership should use Worksheets A 
relates to the current year excess            the total on Part I, line 24.                   and B in these instructions and is 

                                                             -10-

- 11 -

Page 11 of 17 Fileid: … ns/i8990/202212/a/xml/cycle08/source 9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

responsible for keeping records that group, the U.S. shareholders that file the CFC Group election is being calculated.
compute the allocation. Partnerships that CFC group's Form 8990 must attach Also enter the amount from line 2 on Form
allocate all section 163(j) items in step 2 Worksheet C to their tax return together 8990, line 5.
proportionately do not need to use with the CFC group's Form 8990 and
Line 3. Subtract line 2 from line 1. If
Worksheets A and B. complete Part I of the CFC group's Form
the amount on line 3 is greater than or
8990 in accordance with these
equal to zero, the safe-harbor requirement
Lines 1 through 7 of Worksheet A are instructions for Worksheet C.
taken from the partnership’s Form 8990, is met if all other eligibility requirements
which it must complete first. Lines 8 Complete Worksheet C before are met. Check “Yes” on Form 8990, line
through 10 reflect the manner in which the completing Part I of Form 8990. Complete D. Skip lines 4 through 14, continue to
partnership allocated its ATI, business lines A through D of Form 8990 in line 15. Leave the remaining lines of Form
interest income, and business interest accordance with the instructions 8990, Part I (all lines other than line 5 and
expense to its partners. Only items that discussed earlier in Specific Instructions line 25) blank.
were taken into account in lines 1 through and complete the remainder of Form 8990 If the amount on line 3 is less than zero,
3 are taken into account in lines 8 through in accordance with the instructions below. continue to line 4.
10. As a result, section 743(b) If a safe-harbor election is made,
adjustments, section 704(c) remedial Schedules A and B should not be Line 4. Qualified tentative taxable in-
allocations, allocations of investment completed. come (QTTI). Enter the stand-alone
applicable CFC's QTTI if a stand-alone
income and expense, and amounts A safe-harbor election may be made election is being calculated. Enter the CFC
determined for the partner under only for a stand-alone applicable CFC or group's QTTI if a CFC group election is
Regulations section 1.882-5 are not taken for a CFC group. Thus, for example, it may being calculated. Also enter the amount
into account in lines 8 through 10. See not be made for an applicable CFC that is from line 4 on Form 8990, line 6.
Regulations section 1.163(j)-6(f)(2)(ii) for a specified group member if a CFC group With respect to a stand-alone
the definitions of “allocable ATI” (line 8), election is not in effect, and it may not be applicable CFC, QTTI means an
“allocable business interest income” made for any CFC group member unless it applicable CFC's tentative taxable income
(line 9), and “allocable business interest is made with respect to the CFC group as for the tax year, determined by taking into
expense” (line 10). All of the information a whole. account only items properly allocable to a
necessary to complete the rest of
Worksheets A and B is contained in lines For purposes of the safe-harbor non-excepted trade or business. With
1 through 10. See the Instructions for election, all items must be determined respect to a CFC group, QTTI means the
Form 1065 for how the partnership reports using the U.S. dollar. If business interest sum of each CFC group member's
the excess business interest expense, income, business interest expense, or any tentative taxable income for the specified
excess taxable income, and excess items that are taken into account in tax year, determined by taking into
business interest income to the partners. computing QTTI are maintained in a account only items properly allocable to a
currency other than the U.S. dollar, then non-excepted trade or business. See
The calculation in Regulations sections those items must be translated into the Regulations section 1.163(j)-7(h)(4).
1.163(j)-6(f)(2)(i) through (xi) is solely for U.S. dollar using the average exchange Line 5. Thirty percent of QTTI. Multiply
determining each partner’s allocable share rate for the tax year (or specified year, as QTTI from line 4 by 30% (0.30).
of deductible business interest expense, applicable).
excess business interest expense, excess General instructions for lines 6
taxable income, and excess business Line A. Stand-alone election. Check through 9. The amounts on lines 6
interest income. Accordingly, no rule set the box if the election is made for a through 9 are determined based on the
forth in Regulations section 1.163(j)-6(f)(2) stand-alone applicable CFC. A amounts that would be included and
prohibits a partnership from making an stand-alone applicable CFC is an deducted by a hypothetical domestic
allocation to a partner that is otherwise applicable CFC that is not a specified corporation if the domestic corporation
permitted under section 704 and the group member and therefore not eligible had a tax year ending on the last date of
regulations thereunder. to be a CFC group member. the tax year of the stand-alone applicable
Line B. CFC group election. Check the CFC (or specified period of the CFC
Worksheet box if the election is made for a CFC group), it wholly owned the stand-alone
C—Stand-Alone group. applicable CFC throughout the CFC's tax
year (or wholly owned each CFC group
Applicable CFC/CFC Line C. If a CFC group election has been member throughout the CFC group
made, for the specified period, does any member's specified tax year), it did not
Group Safe Harbor CFC group member have any pre-group own any assets other than stock in the
Election disallowed business interest expense stand-alone applicable CFC (or CFC
Worksheet C is used to determine carryforward? If yes, the CFC group is not group members), and it had no other items
eligibility for the safe-harbor election under eligible for the safe-harbor. of income, gain, deduction, or loss.
Regulations section 1.163(j)-7(h). Fill out Additionally, the amounts on lines 6
Section 1 to indicate the type of election. Line 1. Business interest income.
Enter the stand-alone applicable CFC's through 9 are determined by taking into
Sections 2, 3, 4, and 5 determine account any elections that are made with
eligibility. If the safe-harbor election is business interest income if a stand-alone
election is being calculated. Enter the CFC respect to the applicable CFC(s),
made for a stand-alone applicable CFC, including under Regulations section
the U.S. shareholders that file Form 8990 group's business interest income if a CFC
Group election is being calculated. Also 1.954-1(d)(5) (relating to the subpart F
for the stand-alone applicable CFC must high-tax exception) and Regulations
attach Worksheet C to their tax returns enter the amount from line 1 on Form
8990, line 25. section 1.951A-2(c)(7)(viii) (relating to the
together with the Form 8990 of the GILTI high-tax exclusion). These amounts
stand-alone applicable CFC and complete Line 2. Business interest expense. are also determined without regard to any
Part I of the stand-alone applicable CFC's Enter the stand-alone applicable CFC's section 163(j) limitation on business
Form 8990 in accordance with these business interest expense if a stand-alone interest expense and without regard to any
instructions for Worksheet C. If the election is being calculated. Enter the CFC disallowed business interest expense
safe-harbor election is made for a CFC group's business interest expense if a

-11-

- 12 -

Page 12 of 17 Fileid: … ns/i8990/202212/a/xml/cycle08/source 9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

carryovers. In addition, those amounts are allowed for the hypothetical domestic lines other than lines 5, 6, 22, and 25)
determined by only taking into account corporation under section 245A (by blank.
items of the applicable CFC(s) that are reason of section 964(e)(4)). If the amount on line 14 is less than
properly allocable to a non-excepted trade zero, the safe-harbor eligibility
Line 10. Total eligible amount.
or business under Regulations section requirements are not met.
Combine lines 6 through 9. Enter the
1.163(j)-10. See Regulations section
amount on Form 8990, line 22.
1.163(j)-7(h)(3). Line 15. Name(s) of all designated U.S.
Line 11. Thirty percent of eligible persons. Enter the name(s) of all
Line 6. Section 951(a)(1)(A) amount. designated U.S. persons. Attach an
amount. Multiply the eligible amount
Include on line 6 amounts that would be additional statement if necessary.
(line 10) by 30% (0.30).
includable by the hypothetical domestic
corporation under section 951(a)(1)(A). Line 12. Enter the lesser of line 5 or Line 16. Taxpayer identification num-
line 11. ber(s) of line 15. Enter the taxpayer
Line 7. Section 951A(a) amount. identification number(s) for all persons
Include on line 7 amounts that would be Line 13. Business interest expense. listed on line 15. Attach an additional
includable by the hypothetical domestic Enter the amount from line 2. statement if necessary.
corporation under section 951A(a). Line 14. Subtract line 13 from line 12. Line 17. Tax year or specified period
Line 8. Section 250 amount. Include on If the amount on line 14 is greater than or (as applicable). Enter the stand-alone
line 8 any deduction that would be allowed equal to zero, the safe-harbor requirement applicable CFC's tax year or the CFC
for the hypothetical domestic corporation is met if all other eligibility requirements group's specified period to which the
under section 250(a)(1)(B)(i). are met. Check “Yes” box on Form 8990, election relates.
line D, and continue to line 15. Leave the
Line 9. Section 245A amount. Include
remaining lines of Form 8990, Part I (all
on line 9 any deduction that would be

Average Annual Gross Receipts Worksheet Per Section 448(c)
Column A Column B Column C
1st preceding tax year 2nd preceding tax year 3rd preceding tax year
1. Annual gross receipts $ $ $
2. Plus annual gross receipts of related entities per aggregate rules $ $ $
3. Total annual gross receipts $ $ $
4. Average annual gross receipts (line 3 columns A + B + C divided by
3) $

-12-

- 13 -

Page 13 of 17            Fileid: … ns/i8990/202212/a/xml/cycle08/source                                       9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Determination of Each Partner’s Deductible Business Interest Expense 
and Section 163(j) Excess Items—Worksheet A                                                             Keep for Your Records
Before you begin:               Complete Form 8990 before beginning this worksheet. 
                                This worksheet provides space for up to three partners. If there are more than three partners, use more than 
                                 one worksheet. The total column should reconcile to amounts for all partners.
                                                                                Partner 1   Partner 2         Partner 3   Total
Step 1: Partnershiplevel calculation required by section 163(j)(4)(A).
1.  Partnership’s Adjusted Taxable Income (ATI) (Form 8990, line 22)  
2.  Partnership’s business interest income (Form 8990, line 25)  .
3.  Partnership’s business interest expense (Form 8990, subtract 
    line 4 from line 5)      . .     . . .  .  .    . .    .        . . .
4.  Partnership’s deductible business interest expense (Form 8990, 
    subtract line 4 from line 30) .    . .  .  .    . .    .        . . .
5.  Partnership’s excess business interest expense (Form 8990, line 32)  
6.  Partnership’s excess taxable income (Form 8990, line 36)            .
7.  Partnership’s excess business interest income (Form 8990, line 37)  
Step 2: Determine each partner’s section 163(j) items.
8.  Partner’s allocable ATI. See instructions  .    . .    .        . . .
9.  Partner’s allocable business interest income. See instructions  
10. Partner’s allocable business interest expense. See instructions  
Step 3: Partnerlevel comparison of business interest income and business interest expense.
11. Subtract line 10 from line 9. (If zero or less, enter   0 .)  . . .
12. Subtract line 9 from line 10. (If zero or less, enter   0 .)  . . .
Step 4: Matching partnership and aggregate partner excess business interest income.
13. Divide line 11 by the line 11 total column amount. (If the total 
    column equals zero, enter   0 .)   .  .  .    . .    .        . . .                 %           %                 %                     %
14. Multiply line 13 by the line 12 total column amount .           . . .
15. Subtract line 14 from line 11. (If zero or less, enter   0 .)   . .
Step 5: Remaining business interest expense determination.
16. Divide line 12 by the line 12 total column amount. (If the total 
    column equals zero, enter   0 .)   .  .  .    . .    .        . . .                 %           %                 %                     %
17. Multiply line 16 by the line 11 total column amount .           . . .
18. Subtract line 17 from line 12. (If zero or less, enter   0 .)   . .
Step 6: Determination of ﬁnal allocable ATI.
19. If line 8 is greater than or equal to $0, enter the amount from 
    line 8. Otherwise, enter   0   . . .  .  .    . .    .        . . .
20. If  line  8  is  less  than  $0,  enter  the  absolute  value  of  line  8. 
    Otherwise, enter   0   . .     . . .  .  .    . .    .        . . .
21. Divide line 19 by the line 19 total column amount. (If the total 
    column equals zero, enter   0 .)   .  .  .    . .    .        . . .                 %           %                 %                     %
22. Multiply line 21 by the line 20 total column amount .           . . .
23. Subtract line 22 from line 19. (If zero or less, enter   0 .)   . .
Step 7: Partnerlevel comparison of the applicable percentage of ATI and remaining business interest expense.
24. Multiply line 23 by the applicable percentage (dened earlier)  
25. Subtract line 18 from line 24. (If zero or less, enter   0 .)   . .
26. Subtract line 24 from line 18. (If zero or less, enter   0 .)   . .

                                                                                -13-

- 14 -

Page 14 of 17 Fileid: … ns/i8990/202212/a/xml/cycle08/source 9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Determination of Each Partner’s Deductible Business Interest Expense
and Section 163(j) Excess Items—Worksheet A—Continued Keep for Your Records
Partner 1 Partner 2 Partner 3 Total
Step 8: Partner priority right to ATI capacity excess determination.
27a. Is the line 5 total column amount greater than zero? Yes No
27b. Is the line 20 total column amount greater than zero? Yes No
27c. Is the line 26 total column amount greater than zero? Yes No
27d. Are lines 27(a), 27(b), and 27(c) all “Yes”? . Yes No
28. If line 27d is “No,” enter the amount from line 25. Otherwise,
complete Worksheet B . . . . . . . . . . . .
29. If line 27d is “No,” enter the amount from line 26. Otherwise,
complete Worksheet B . . . . . . . . . . . .
30. If line 27d is “No,” enter -0-. Otherwise, complete Worksheet B
Step 9: Matching partnership and aggregate partner excess taxable income.
31. Divide line 28 by the line 28 total column amount. (If the total
column equals zero, enter -0-.) . . . . . . . . . % % % %
32. Multiply line 31 by the line 29 total column amount . . . .
33. Subtract line 32 from line 28. (If zero or less, enter -0-.) . .
Step 10: Match partnership and aggregate partner excess business interest expense.
34. Divide line 29 by the line 29 total column amount. (If the total
column equals zero, enter -0-.) . . . . . . . . . % % % %
35. Multiply line 34 by the line 28 total column amount . . . .
36. If line 30 is greater than zero, enter the amount from line 30.
Otherwise, subtract line 35 from line 29. (If zero or less, enter -0-.)
Step 11: Final section 163(j) excess item and deductible business interest expense allocation.
37. Partner’s deductible business interest expense. Subtract line
36 from line 10 . . . . . . . . . . . . . .
38. Partner’s excess business interest expense. Enter the amount
from line 36 . . . . . . . . . . . . . . .
39. Partner’s excess taxable income. Multiply line 33 by (10/3) .
40. Partner’s excess business interest income. Enter the amount
from line 15 . . . . . . . . . . . . . . .
Note.
• Line 3: Equals the partnership’s business interest expense, not taking into account oor plan nancing interest expense. From Form 8990,
subtract line 4 from line 5.
• Line 4: Equals the partnership’s deductible business interest expense, not taking into account oor plan nancing interest expense. From
Form 8990, subtract line 4 from line 30.
• Line 8: Equals “allocable ATI” as dened in Proposed Regulations section 1.163(j) 6(f)(2)(ii).
• Line 9: Equals “allocable business interest income” as dened in Proposed Regulations section 1.163(j) 6(f)(2)(ii).The line 9 total column
amount must equal the line 2 total column amount.
• Line 10: Equals “allocable interest expense” as dened in Proposed Regulations section 1.163(j) 6(f)(2)(ii).The line 10 total column amount
must equal the line 3 total column amount.
• Line 23: The line 23 total column amount must equal the line 1 total column amount.
• Line 27d: If line 27d is “Yes,” the partnership must complete Worksheet B (in order to get the correct values for lines 28–30) before proceeding
to line 31 of Worksheet A.
• Line 37: The line 37 total column amount must equal the line 4 total column amount.
• Line 38: The line 38 total column amount must equal the line 5 total column amount.
• Line 39: The line 39 total column amount must equal the line 6 total column amount.
• Line 40: The line 40 total column amount must equal the line 7 total column amount.
• The lines 13, 16, 21, 31, and 34 total column amount must equal 100% or zero.

-14-

- 15 -

Page 15 of 17              Fileid: … ns/i8990/202212/a/xml/cycle08/source                                    9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Determination of Each Partner’s Relevant 
Section 163(j) Items—Worksheet B                                                                        Keep for Your Records

Before you begin:              Complete “Determination of Each Partner’s Deductible Business Interest Expense and Section 163(j) 
                                Excess Items—Worksheet   A” before beginning this worksheet.
                               This worksheet provides space for up to three partners. If there are more than three partners, use more than 
                                one worksheet. The total column should reconcile to amounts for all partners.
Step 8A: Who must complete this worksheet.
1.  If the answer to line 27(d) of Worksheet A is “Yes,” complete 
    this worksheet.
                                                                                Partner 1   Partner 2        Partner 3   Total
Step 8B: Determine whether to perform Step 8C or Step 8D.
2.  Subtract line 23 of Worksheet A from line 19 of Worksheet A .
3.  Multiply line 2 of Worksheet B by the applicable percentage  .
4.  If line 26 of Worksheet A is greater than zero, enter the amount 
    from line 3 of Worksheet B. Otherwise, enter -0- .   . . .
5.  Enter  the  smaller  of  line  4  of  Worksheet  B  or  line  26  of 
    Worksheet A  .      .  .  . . .     .  . . . .   .   . . .
6.  If the line 25 total column amount of Worksheet A is greater 
    than or equal to the line 5 total column amount of Worksheet 
    B, complete Step 8C of Worksheet B. If the line 5 total column 
    amount of Worksheet B is greater than the line 25 total column 
    amount of Worksheet A, complete Step 8D of Worksheet B.
Step 8C: Calculate lines 28, 29, and 30 of Worksheet A. Return to and complete Worksheet A after Step 8C.
7.  Divide  line  25  of  Worksheet  A  by  the  line  25  total  column 
    amount of Worksheet A. (If the line 25 total column amount of 
    Worksheet A equals zero, enter -0-.)  .  . . .   .   . . .                            %           %                %                     %
8.  Multiply  line  7  of  Worksheet  B  by  the  line  5  total  column 
    amount of Worksheet B       . .     .  . . . .   .   . . .
9.  Subtract line 8 of Worksheet B from line 25 of Worksheet A. 
    Enter the amount(s) on line 28 of Worksheet A  . .   . . .
10. Subtract line 5 of Worksheet B from line 26 of Worksheet A. 
    Enter the amount(s) on line 29 of Worksheet A  . .   . . .
11. Enter  0  on line 30 of Worksheet A. 
Step 8D: Calculate lines 28, 29, and 30 of Worksheet A. Return to and complete Worksheet A after Step 8D.
12. Divide line 4 of Worksheet B by the line 4 total column amount 
    of  Worksheet  B.  (If  the  line  4  total  column  amount  of 
    Worksheet B equals zero, enter -0-.)  .  . . .   .   . . .
13. Multiply  line  12  of  Worksheet  B  by  the  line  25  total  column 
    amount of Worksheet A       . .     .  . . . .   .   . . .
14. If line 4 of Worksheet B is greater than zero, enter the amount 
    from line 26 of Worksheet A. Otherwise, enter -0-  . . . .
15. Subtract line 14 of Worksheet B from line 13 of Worksheet B. 
    (If  zero  or  less,  enter  -0-.)  Enter  the  amount(s)  on  line  28  of 
    Worksheet A  .      .  .  . . .     .  . . . .   .   . . .
16. Subtract line 13 of Worksheet B from line 14 of Worksheet B. 
    (If  zero  or  less,  enter  -0-.)  Enter  the  amount(s)  on  line  29  of 
    Worksheet A  .      .  .  . . .     .  . . . .   .   . . .
17. If  line  4  of  Worksheet  B  equals  zero,  enter  the  amount  from 
    line  26  of  Worksheet  A.  Otherwise,  enter  -0-.  Enter  the 
    amount(s) on line 30 of Worksheet A  .   . . .   .   . . .

                                                                                -15-

- 16 -

Page 16 of 17  Fileid: … ns/i8990/202212/a/xml/cycle08/source                                           9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Stand-Alone Applicable CFC/CFC Group Safe Harbor Election 
Section 163(j) Items—Worksheet C                                                                      Attach to Your Return

Name of foreign entity
Employer identication number, if any                                 Reference ID number

Section 1—Type of Safe-Harbor Election
A. Stand-alone election                  B. CFC group election
C. If CFC group election has been made, for the specied period, does any CFC group member have any pre-group disallowed 
business interest expense carryforward?   Yes       No
If “Yes,” STOP; the CFC group is not eligible for safe-harbor.
Section 2—Business Interest Income Safe-Harbor Calculation

1  Business interest income  ..........                   .   ....    .   1

2  Business interest expense ..........                   .   ....    .   2

3  Subtract line 2 from line 1. See instructions . . .......          ........             .          . 3
Section 3—Qualiﬁed Tentative Taxable Income Calculation

4  Qualied tentative taxable income     ..........               . . .   4

5  Multiply qualied tentative taxable income (line 4) by the applicable percentage. See instructions . 5
Section 4—Eligible Amount Calculation

6  Section 951(a)(1)(A) amount ........                .  .   . ....      6

7  Section 951A(a) amount    ..........                   .   ....    .   7

8  Section 250 amount   ..........                   . ....       . . .   8          (                )

9  Section 245A amount  ..........                     .  ....      . .   9          (                )

10 Total eligible amount. Combine lines 6 through 9  . ...      . . . .   10

11 Multiply eligible amount (line 10) by the applicable percentage. See instructions . .....          . 11
Section 5—Safe-Harbor Calculation

12 Enter the lesser of line 5 or line 11 ..........               . . . ........                      . 12

13 Business interest expense ..........                   .   ....    . . .....          . .          . 13

14 Subtract line 13 from line 12. See instructions . . .......          ........                      . 14
Section 6—Name and Taxpayer Identiﬁcation Number of All Designated U.S. Persons

15 Name(s) of all designated U.S. persons 

16 Taxpayer identication number(s) of persons on line 15 

17 Taxable year or specied period (as applicable)

                                                            -16-

- 17 -

Page 17 of 17   Fileid: … ns/i8990/202212/a/xml/cycle08/source                            9:42 - 23-Jan-2023

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

                                              unless the form displays a valid OMB        approved under OMB control number 
Paperwork Reduction Act Notice.      We       control number. Books or records relating   1545-0123 and is included in the 
ask for the information on this form to carry to a form or its instructions must be       estimates shown in the instructions for 
out the Internal Revenue laws of the          retained as long as their contents may      their business income tax return.
United States. You are required to give us    become material in the administration of 
the information. We need it to ensure that    any Internal Revenue law. Generally, tax    If you have comments concerning the 
you are complying with these laws and to      returns and return information are          accuracy of these time estimates or 
allow us to figure and collect the right      confidential, as required by section 6103.  suggestions for making this form simpler, 
amount of tax.                                                                            we would be happy to hear from you. See 
You are not required to provide the           The time needed to complete and file        the instructions for the tax return with 
information requested on a form that is       this form will vary depending on individual which this form is filed.
subject to the Paperwork Reduction Act        circumstances. The estimated burden for 
                                              business taxpayers filing this form is 

                                              -17-

PDF file checksum: 703361115

(Plugin #1/9.12/13.0)