It depends. The following information about the business interest deduction and the limitations are show for you below. Any allowed amount will be used on Schedule A, if the amount is from your partnership K1. See the instructions linked below.
- Line 30 is the amount of current year business interest expense deduction allowed after considering the section 163(j) limitation.
- IRS Instructions Form 8990 - (page 9 for calculation of any disallowed expense and statement if necessary).
IRS FAQs for What are the limitations of 163j?
Q1. What is the section 163(j) limitation on the deduction for business interest expense? (updated January 10, 2023)
A1. Generally, taxpayers can deduct interest expense paid or accrued in the taxable year. However, if the section 163(j) limitation applies, the amount of deductible business interest expense in a taxable year cannot exceed the sum of:
- the taxpayer's business interest income for the taxable year;
- 30% of the taxpayer's adjusted taxable income (ATI) for the taxable year; and
- the taxpayer's floor plan financing interest expense for the taxable year.
Under the CARES Act, a different percentage (50%) of ATI may apply for taxable years beginning in 2019 and 2020. See the CARES Act, discussed later, and Revenue Procedure 2020-22 PDF, for ATI elections and special rules for partnership.
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