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