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                                                                                                      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

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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 

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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 

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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 

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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 

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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 

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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).

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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 

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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 

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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 

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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 

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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)                                                                 $

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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 .)   . .

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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.

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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  .   . . .   .   . . .

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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)

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                                              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-