I have Excess business interest expense in box 13K on my K1 (form 1065). How does this affect my personal tax return? Can I dedcut it? Thank you!

[wjschermer]

Thank you!!

[Florida-Rob]

Would you PLEASE provide a 8990 example:

on my Energy Transfer ET K1, i have say $798 in box 13K (Excess Business Interest Expense)

on 8990, i put this in 43C ? and $0 in 43D (as no prior carryforward)

43e is easy, its c+d

43f (current year excess taxable income) is easy, thats line 20AE (Excess Taxable Income)

so what is entered in 43g ? "(g) Current year excess business interest income" ? I think its 20AF - so if this is missing, then its 0 zero ?

43h is lesser of e OR f+g, so since f&g are zero, then we use zero

43i = e-h, = $798 carryforward

correct?

i see an example HERE, but not clear.

Q.) should 8990 Row 30 list the $798 ?  (Total current year business interest expense deduction. See instructions)..

"A taxpayer subject to the section 163(j) limitation will enter on line 30 the smaller of line 29 or line 5"

so ROW 30 = $0

Q. So where do we show the $798 ?  just on the 8990 Schedule A ?  nowhere else ?

So we cannot use the $798 on this years return and must carry forward to next year (SEE below)

Found this from HERE:

Perhaps the most complicated aspect of the new law is what happens to the BIE once it is limited. Defined as excess business interest expense (EBIE), the amount becomes nondeductible in the current year and is carried forward to future years. It can only be deducted if, in a future year, the same activity that generated the EBIE in the first place now generates EBII or EBTI. The only way ...to eventually receive a tax benefit and deduct the EBIE will be if X itself generates EBII or EBTI in [future years] and reports it on A’s K-1.

SO I cannot use this $798 till next year.

but still more work, from HERE::

"Despite EBIE being currently nondeductible, A is still required to reduce her basis in X to the extent of her allocation of current year EBIE. Even though it is a carryforward and potentially deductible in the future, basis is reduced immediately. That may lead to basis limitations in other areas, such as the inability to take future losses because of at-risk limitations, or the recognition of gain on a distribution in excess of basis. To the extent that the taxpayer disposes of the investment before getting a tax benefit for the carryforward, the carryforward disappears and is added back to the basis of the investment for purposes of calculating gain or loss on disposition."

so reduction in BASIS is on the K1 'sales worksheet'

[DianeW777]

It depends. Excess business interest income is the amount by which business interest income exceeded business interest expense at the partnership level. Excess taxable income is allocated to each partner in the same manner as the non-separately stated taxable income or loss of the partnership. The link below should help you finalize your form. 

• IRS FAQs about the limitation on the deduction for business interest expense

Once you are confident in your numbers you can move forward with Form 8990 and mail it with your tax return.

@Florida-Rob 

[M-MTax]

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@PatriciaV wrote:

(You can also mail it separately from an e-filed return if you include Form 8453, which you can print from TurboTax Premier.)

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I don't think so.

Form 8990 is not listed on Form 8453 as one of the forms to be attached and mailed with Form 8453. 

[Mike9241]

yes the sales schedule showing your adjusted basis has been reduced by 13k. Since you can't deduct it currently and you apparently sold ET you get to add it back. See the instructions for column 5 on the sales schedule. The only potential issue is with the IRS if you don't file the 8990.  have no way of knowing.