topic "Business Interest Expense Limitation Election" section 163(j)(7) - Yes or No? in Business & farm

"Business Interest Expense Limitation Election" section 163(j)(7) - Yes or No?

NS1 — Sat, 01 Jun 2019 20:34:14 GMT

The way this choice is formulated in TurboTax Business makes no sense whatsoever, and I can say the same for the "Explain This" section which is supposed to help... This question required Yes/No answer that is irrevocable and applies to future years, so we need to make sure we answer correctly.

We are a small business (LLC) and we make jewelry. We do not have any interest expenses, and we are obviously not farming or real property business. How should we answer this?

TurboTax is automatically selecting Yes for us, but I do not feel comfortable leaving this answer without understanding it, especially since it cannot be changed in future years.

The irrevocable election does not apply to your business....

Rick19744 — Sat, 01 Jun 2019 20:34:15 GMT

The irrevocable election does not apply to your business.

An exception applies to farming, agricultural and horticultural cooperatives.

The Section 163(j) will apply to your business annually, but since you do not have any interest expense in 2018, it is a moot issue.

The question at hand should be answered "no" since your business is none of those listed.

Thank you! That's what I thought, but TurboTax is selecti...

NS1 — Sat, 01 Jun 2019 20:34:16 GMT

Thank you! That's what I thought, but TurboTax is selecting YES by default for "small businesses" and since their formulation of the question is beyond confusing, I really needed a confirmation. Thanks very much for taking the time to help!

Welcome

Rick19744 — Sat, 01 Jun 2019 20:34:18 GMT

Welcome

Re: "Business Interest Expense Limitation Election" section 163(j)(7) - Yes or No?

HighVoltage — Wed, 17 Jul 2019 18:12:59 GMT

What about contractors who work ON real property and utlity property? Does sect 163-j-7 apply?