• videocam Live Webinar with Live Q&A
  • calendar_month May 28, 2026 @ 1:00 PM ET/10:00 AM PT
  • signal_cellular_alt Intermediate
  • card_travel Tax Law
  • schedule 90 minutes

Section 163(j) Interest Deduction Limitations Under OBBBA: New IRS Guidance, State Tax Issues, Partnerships, CFC

Rules for Computing ATI, Determining Deduction Cap, Special Carryover and Transition Rules, Elections and Exemptions

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About the Course

Introduction

This CLE/CPE course will address Section 163(j) interest deduction limitations under the One Big Beautiful Bill Act (OBBBA) and new IRS guidance. The panel will discuss the impact of OBBBA amendments to Section 163(j) on partnerships and CFCs, the rules for computing ATI and determining the deduction cap, special carryover and transition rules, and elections and exemptions, as well as offer methods to ensure tax savings.

Description

Section 163(j) limitations on business interest deductibility create significant tax consequences for many partnerships. This broad business interest limitation rule applies to all taxpayers, with limited exceptions, reducing a taxpayer's ability to deduct interest expenses, and has been amended further under OBBBA. Tax advisers to partnerships need a clear understanding of the impact of these rules limiting deductibility and regulations to avoid unanticipated tax costs.

Under Section 163(j), a taxpayer cannot deduct business interest expense for a taxable year to the extent that the interest expense exceeds the sum of:

  • the taxpayer's business interest income for the taxable year;
  • 30% of the taxpayer's ATI for the taxable year, or zero if the taxpayer's ATI for the taxable year is less than zero; and,
  • the taxpayer's floor plan financing interest expense for the taxable year (this relates mostly to car and boat dealers).

Under OBBBA, the computation of ATI now includes depreciation, amortization, and depletion, revises the ordering rules for applying Section 163(j), excludes CFC Income from ATI calculation, and includes other key amendments.

Tax professionals must understand how the modifications of Section 163(j) under OBBBA impact tax liability and planning options for taxpayers.

Listen as our panel discusses the impact of OBBBA amendments to Section 163(j) on partnerships and CFCs, the rules for computing ATI and determining the deduction cap, special carryover and transition rules, and elections and exemptions, as well as offers methods to ensure tax savings.

Presented By

Paul M. Budd
Senior Associate
Eversheds Sutherland LLP

Mr. Budd counsel clients in federal tax controversy and litigation. He adeptly represents clients against the IRS and federal government, handling a broad spectrum of cases for individuals, corporations, partnerships, estates, and closely held businesses. Mr. Budd's experience spans IRS audits and civil examinations, criminal investigations, appeals, and litigation. He has successfully litigated numerous tax disputes in the U.S. Tax Court, Federal District Court and the U.S. Court of Federal Claims. Mr. Budd's litigation experience covers a wide array of tax issues, including conservation easements, characterization of shareholder debt vs. equity, passive activity losses, hobby losses, valuation disputes, civil penalty defense and refund claims.

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Brittany Kovalskaya
Attorney
Eversheds Sutherland LLP

Ms. Kovalskaya advises clients in all stages of federal and state tax controversies, including sensitive issue examinations, administrative appeals, and civil tax litigation. Her clients often include high-net-worth individuals, closely held entities, business enterprises, partnerships, limited liability companies, and corporations. Ms. Kovalskaya is effective at counseling her clients on complex substantive and procedural tax matters with high-stakes implications.

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Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

  • CPE credit is not available on recordings.

  • BARBRI is a NASBA CPE sponsor and this 90-minute webinar is accredited for 1.5 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).


  • Live Online


    On Demand

Date + Time

  • event

    Thursday, May 28, 2026

  • schedule

    1:00 PM ET/10:00 AM PT

I. Federal treatment

A. OBBBA modifications to Section 163(j)

B. Contrasting Section 163(j) treatment of business interest with prior statute treatment

C. The impact of Section 163(j) on partnerships and CFCs

D. Calculating ATI to arrive at 30% deduction limitation

E. Small business exception

F. Aggregation rules

G. The opt-out election for specific real estate partnerships

H. Partnership carryover special rules

II. State tax issues

A. State conformity updates

B. Comparison of state approaches

C. Partnership and partner tracking of state adjustments

The panel will review these and other relevant topics:

  • OBBBA modifications to Section 163(j)
  • The impact of Section 163(j) on partnerships and CFCs
  • Specific exceptions to the application of Section 163(j)
  • How to calculate ATI for purposes of determining deduction limitations
  • Elections for real property trades or businesses
  • Special carryforward rules on excess partnership interest expense


Learning Objectives

After completing this course, you will be able to:

  • Recognize the change in business interest deductibility under Section 163(j)
  • Understand the impact of Section 163(j) on partnerships and CFCs
  • Determine how to calculate ATI for purposes of arriving at 30% deduction limitation
  • Identify the exemptions, exceptions, and elections out of the 30% interest deductibility treatment
  • Discern the special rules on 163(j) interest deductibility applicable to partnerships
  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite:

    Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of partnership and corporate structure, agreements and liquidation, including capital accounts, debt allocation and distributions; familiarity rules governing transactions between a partnership and its partner(s); familiarity with deferred foreign-source income, earnings and profits, controlled foreign corporations, specified foreign corporations, and repatriation of deferred foreign earnings.

BARBRI, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

BARBRI CE webinars-powered by Barbri-are backed by our 100% unconditional money-back guarantee: If you are not satisfied with any of our products, simply let us know and get a full refund. Contact us at 1-800-926-7926 .