Title 26
SECTION 1.163(j)-5
1.163(j)-5 General rules governing disallowed business interest expense carryforwards for C corporations.
§ 1.163(j)-5 General rules governing disallowed business interest expense carryforwards for C corporations.(a) Scope and definitions - (1) Scope. This section provides rules regarding disallowed business interest expense carryforwards for taxpayers that are C corporations, including members of a consolidated group. Paragraph (b) of this section provides rules regarding the treatment of disallowed business interest expense carryforwards. Paragraph (c) of this section provides a cross-reference to other rules regarding disallowed business interest expense carryforwards in transactions to which section 381(a) applies. Paragraph (d) of this section provides rules regarding limitations on disallowed business interest expense carryforwards from separate return limitation years (SRLYs). Paragraph (e) of this section provides cross-references to other rules regarding the application of section 382 to disallowed business interest expense carryforwards. Paragraph (f) of this section provides a cross-reference to other rules regarding the overlap of the SRLY limitation with section 382. Paragraph (g) of this section references additional rules that may limit the deductibility of interest or the use of disallowed business interest expense carryforwards.
(2) Definitions - (i) Allocable share of the consolidated group's remaining section 163(j) limitation. The term allocable share of the consolidated group's remaining section 163(j) limitation means, with respect to any member of a consolidated group, the product of the consolidated group's remaining section 163(j) limitation and the member's remaining current-year interest ratio.
(ii) Consolidated group's remaining section 163(j) limitation. The term consolidated group's remaining section 163(j) limitation means the amount of the consolidated group's section 163(j) limitation calculated pursuant to § 1.163(j)-4(d)(2), reduced by the amount of interest deducted by members of the consolidated group pursuant to paragraph (b)(3)(ii)(C)(2) of this section.
(iii) Remaining current-year interest ratio. The term remaining current-year interest ratio means, with respect to any member of a consolidated group for a particular taxable year, the ratio of the remaining current-year business interest expense of the member after applying the rule in paragraph (b)(3)(ii)(C)(2) of this section, to the sum of the amounts of remaining current-year business interest expense for all members of the consolidated group after applying the rule in paragraph (b)(3)(ii)(C)(2) of this section.
(b) Treatment of disallowed business interest expense carryforwards - (1) In general. The amount of any business interest expense of a C corporation not allowed as a deduction for any taxable year as a result of the section 163(j) limitation is carried forward to the succeeding taxable year as a disallowed business interest expense carryforward under section 163(j)(2) and § 1.163(j)-2(c).
(2) Deduction of business interest expense. For a taxpayer that is a C corporation, current-year business interest expense is deducted in the current taxable year before any disallowed business interest expense carryforwards from a prior taxable year are deducted in that year. Disallowed business interest expense carryforwards are deducted in the order of the taxable years in which they arose, beginning with the earliest taxable year, subject to certain limitations (for example, the limitation under section 382). For purposes of section 163(j), disallowed disqualified interest is treated as carried forward from the taxable year in which a deduction was disallowed under old section 163(j).
(3) Consolidated groups - (i) In general. A consolidated group's disallowed business interest expense carryforwards for the current consolidated return year (the current year) are the carryforwards from the group's prior consolidated return years plus any carryforwards from separate return years.
(ii) Deduction of business interest expense - (A) General rule. All current-year business interest expense of members of a consolidated group is deducted in the current year before any disallowed business interest expense carryforwards from prior taxable years are deducted in the current year. Disallowed business interest expense carryforwards from prior taxable years are deducted in the order of the taxable years in which they arose, beginning with the earliest taxable year, subject to the limitations described in this section.
(B) Section 163(j) limitation equals or exceeds the current-year business interest expense and disallowed business interest expense carryforwards from prior taxable years. If a consolidated group's section 163(j) limitation for the current year equals or exceeds the aggregate amount of its members' current-year business interest expense and disallowed business interest expense carryforwards from prior taxable years that are available for deduction, then none of the current-year business interest expense or disallowed business interest expense carryforwards is subject to disallowance in the current year under section 163(j). However, a deduction for the members' business interest expense may be subject to limitation under other provisions of the Code or the Income Tax Regulations (see, for example, paragraphs (c), (d), (e), and (f) of this section).
(C) Current-year business interest expense and disallowed business interest expense carryforwards exceed section 163(j) limitation. If the aggregate amount of members' current-year business interest expense and disallowed business interest expense carryforwards from prior taxable years exceeds the consolidated group's section 163(j) limitation for the current year, then the following rules apply in the order provided:
(1) The group first determines whether its section 163(j) limitation for the current year equals or exceeds the aggregate amount of the members' current-year business interest expense.
(i) If the group's section 163(j) limitation for the current year equals or exceeds the aggregate amount of the members' current-year business interest expense, then no amount of the group's current-year business interest expense is subject to disallowance in the current year under section 163(j). Once the group has taken into account its members' current-year business interest expense, the group applies the rules of paragraph (b)(3)(ii)(C)(4) of this section.
(ii) If the aggregate amount of members' current-year business interest expense exceeds the group's section 163(j) limitation for the current year, then the group applies the rule in paragraph (b)(3)(ii)(C)(2) of this section.
(2) If this paragraph (b)(3)(ii)(C)(2) applies (see paragraph (b)(3)(ii)(C)(1)(ii) of this section), then each member with current-year business interest expense and with current-year business interest income or floor plan financing interest expense deducts current-year business interest expense in an amount that does not exceed the sum of the member's business interest income and floor plan financing interest expense for the current year.
(3) After applying the rule in paragraph (b)(3)(ii)(C)(2) of this section, if the group has any section 163(j) limitation remaining for the current year, then each member with remaining current-year business interest expense deducts a portion of its expense based on its allocable share of the consolidated group's remaining section 163(j) limitation.
(4) If this paragraph (b)(3)(ii)(C)(4) applies (see paragraph (b)(3)(ii)(C)(1)(i) of this section), and if the group has any section 163(j) limitation remaining for the current year after applying the rules in paragraph (b)(3)(ii)(C)(1) of this section, then disallowed business interest expense carryforwards permitted to be deducted (including under paragraph (d)(1)(A) of this section) in the current year are to be deducted in the order of the taxable years in which they arose, beginning with the earliest taxable year. Disallowed business interest expense carryforwards from taxable years ending on the same date that are available to offset tentative taxable income for the current year generally are to be deducted on a pro rata basis under the principles of paragraph (b)(3)(ii)(C)(3) of this section. For example, assume that P and S are the only members of a consolidated group with a section 163(j) limitation for the current year (Year 2) of $200x; the amount of current-year business interest expense deducted in Year 2 is $100x; and P and S, respectively, have $140x and $60x of disallowed business interest expense carryforwards from Year 1 that are not subject to limitation under paragraph (c), (d), or (e) of this section. Under these facts, P would be allowed to deduct $70x of its carryforwards from Year 1 ($100x × ($140x/($60x + $140x)) = $70x), and S would be allowed to deduct $30x of its carryforwards from Year 1 ($100x × ($60x/($60x + $140x)) = $30x). But see § 1.383-1(d)(1)(ii), providing that, if losses subject to and not subject to the section 382 limitation are carried from the same taxable year, losses subject to the limitation are deducted before losses not subject to the limitation.
(5) Each member with remaining business interest expense after applying the rules of this paragraph (b)(3)(ii), taking into account the limitations in paragraphs (c), (d), (e), and (f) of this section, carries the expense forward to the succeeding taxable year as a disallowed business interest expense carryforward under section 163(j)(2) and § 1.163(j)-2(c).
(iii) Departure from group. If a corporation ceases to be a member during a consolidated return year, the corporation's current-year business interest expense from the taxable period ending on the day of the corporation's change in status as a member, as well as the corporation's disallowed business interest expense carryforwards from prior taxable years that are available to offset tentative taxable income in the consolidated return year, are first made available for deduction during that consolidated return year. See § 1.1502-76(b)(1)(i); see also § 1.1502-36(d) (regarding reductions of deferred deductions on the transfer of loss shares of subsidiary stock). Only the amount that is neither deducted by the group in that consolidated return year nor otherwise reduced under the Code or regulations may be carried to the corporation's first separate return year after its change in status.
(iv) Example: Deduction of interest expense - (A) Facts. (1) P wholly owns A, which is a member of the consolidated group of which P is the common parent. P and A each borrow money from Z, an unrelated third party. The business interest expense of P and A in Years 1, 2, and 3, and the P group's section 163(j) limitation for those years, are as follows:
Table 1 To Paragraph (b)(3)(iv)(A)(1)
| Year | P's business interest expense |
A's business interest expense |
P group's section 163(j) limitation |
|---|---|---|---|
| 1 | $150x | $50x | $100x |
| 2 | 60x | 90x | 120x |
| 3 | 25x | 50x | 185x |
(2) P and A have neither business interest income nor floor plan financing interest expense in Years 1, 2, and 3. Additionally, the P group is neither eligible for the small business exemption in § 1.163(j)-2(d) nor engaged in an excepted trade or business.
(B) Analysis - (1) Year 1. In Year 1, the aggregate amount of the P group members' current-year business interest expense ($150x + $50x) exceeds the P group's section 163(j) limitation ($100x). As a result, the rules of paragraph (b)(3)(ii)(C) of this section apply. Because the P group members' current-year business interest expense exceeds the group's section 163(j) limitation for Year 1, P and A must apply the rule in paragraph (b)(3)(ii)(C)(2) of this section. Pursuant to paragraph (b)(3)(ii)(C)(2) of this section, each of P and A must deduct its current-year business interest expense to the extent of its business interest income and floor plan financing interest expense. Neither P nor A has business interest income or floor plan financing interest expense in Year 1. Next, pursuant to paragraph (b)(3)(ii)(C)(3) of this section, each of P and A must deduct a portion of its current-year business interest expense based on its allocable share of the consolidated group's remaining section 163(j) limitation ($100x). P's allocable share is $75x ($100x × ($150x/$200x) = $75x), and A's allocable share is $25x ($100x × ($50x/$200x) = $25x). Accordingly, in Year 1, P deducts $75x of its current-year business interest expense, and A deducts $25x of its current-year business interest expense. P has a disallowed business interest expense carryforward from Year 1 of $75x ($150x−$75x = $75x), and A has a disallowed business interest expense carryforward from Year 1 of $25x ($50x−$25x = $25x).
(2) Year 2. In Year 2, the aggregate amount of the P group members' current-year business interest expense ($60x + $90x) and disallowed business interest expense carryforwards ($75x + $25x) exceeds the P group's section 163(j) limitation ($120x). As a result, the rules of paragraph (b)(3)(ii)(C) of this section apply. Because the P group members' current-year business interest expense exceeds the group's section 163(j) limitation for Year 2, P and A must apply the rule in paragraph (b)(3)(ii)(C)(2) of this section. Pursuant to paragraph (b)(3)(ii)(C)(2) of this section, each of P and A must deduct its current-year business interest expense to the extent of its business interest income and floor plan financing interest expense. Neither P nor A has business interest income or floor plan financing interest expense in Year 2. Next, pursuant to paragraph (b)(3)(ii)(C)(3) of this section, each of P and A must deduct a portion of its current-year business interest expense based on its allocable share of the consolidated group's remaining section 163(j) limitation ($120x). P's allocable share is $48x (($120x × ($60x/$150x)) = $48x), and A's allocable share is $72x (($120x × ($90x/$150x)) = $72x). Accordingly, in Year 2, P deducts $48x of current-year business interest expense, and A deducts $72x of current-year business interest expense. P has a disallowed business interest expense carryforward from Year 2 of $12x ($60x−$48x = $12x), and A has a disallowed business interest expense carryforward from Year 2 of $18x ($90x−$72x = $18x). Additionally, because the P group has no section 163(j) limitation remaining after deducting current-year business interest expense in Year 2, the full amount of P and A's disallowed business interest expense carryforwards from Year 1 ($75x and $25x, respectively) also are carried forward to Year 3. As a result, at the beginning of Year 3, P and A's respective disallowed business interest expense carryforwards are as follows:
Table 2 to Paragraph (b)(3)(iv)(B)(2)
| Year 1 disallowed business interest expense carryforwards |
Year 2 disallowed business interest expense carryforwards |
Total disallowed business interest expense carryforwards |
|
|---|---|---|---|
| P | $75x | $12x | $87x |
| A | 25x | 18x | 43x |
| Total | 100x | 30x | 130x |
(3) Year 3. In Year 3, the aggregate amount of the P group members' current-year business interest expense ($25x + $50x = $75x) and disallowed business interest expense carryforwards ($130x) exceeds the P group's section 163(j) limitation ($185x). As a result, the rules of paragraph (b)(3)(ii)(C) of this section apply. Because the P group's section 163(j) limitation for Year 3 equals or exceeds the P group members' current-year business interest expense, no amount of the members' current-year business interest expense is subject to disallowance under section 163(j) (see paragraph (b)(3)(ii)(C)(1) of this section). After each of P and A deducts its current-year business interest expense, the P group has $110x of section 163(j) limitation remaining for Year 3 ($185x−$25x−$50x = $110x). Next, pursuant to paragraph (b)(3)(ii)(C)(4) of this section, $110x of disallowed business interest expense carryforwards are deducted on a pro rata basis, beginning with carryforwards from Year 1. Because the total amount of carryforwards from Year 1 ($100x) is less than the section 163(j) limitation remaining after the deduction of Year 3 business interest expense ($110x), all of the Year 1 carryforwards are deducted in Year 3. After current-year business interest expense and Year 1 carryforwards are deducted, the P group's remaining section 163(j) limitation in Year 3 is $10x. Because the Year 2 carryforwards ($30x) exceed the remaining section 163(j) limitation ($10x), under paragraph (b)(3)(ii)(C)(4) of this section, each of P and A will deduct a portion of its Year 2 carryforwards based on its allocable share of the consolidated group's remaining section 163(j) limitation. P's allocable share is $4x (($10x × ($12x/$30x)) = $4x), and A's allocable share is $6x (($10x × ($18x/$30x)) = $6x). Accordingly, P and A may deduct $4x and $6x, respectively, of their Year 2 carryforwards. For Year 4, P and A have $8x and $12x of disallowed business interest expense carryforwards from Year 2, respectively.
(c) Disallowed business interest expense carryforwards in transactions to which section 381(a) applies. For rules governing the application of section 381(c)(20) to disallowed business interest expense carryforwards, including limitations on an acquiring corporation's use of the disallowed business interest expense carryforwards of the transferor or distributor corporation in the acquiring corporation's first taxable year ending after the date of distribution or transfer, see § 1.381(c)(20)-1.
(d) Limitations on disallowed business interest expense carryforwards from separate return limitation years - (1) General rule - (A) Cumulative section 163(j) SRLY limitation. This paragraph (d) applies to disallowed business interest expense carryforwards of a member arising in a SRLY (see § 1.1502-1(f))) or treated as arising in a SRLY under the principles of § 1.1502-21(c) and (g). The amount of the carryforwards described in the preceding sentence that are included in the consolidated group's business interest expense deduction for any taxable year under paragraph (b) of this section may not exceed the aggregate section 163(j) limitation for all consolidated return years of the group, determined by reference only to the member's items of income, gain, deduction, and loss, and reduced (including below zero) by the member's business interest expense (including disallowed business interest expense carryforwards) absorbed by the group in all consolidated return years (cumulative section 163(j) SRLY limitation). For purposes of computing the member's cumulative section 163(j) SRLY limitation, intercompany items referred to in § 1.163(j)-4(d)(2)(iv) are included, with the exception of interest items with regard to intercompany obligations. See § 1.163(j)-4(d)(2)(v). Thus, for purposes of this paragraph (d), income and expense items arising from intercompany transactions (other than interest income and expense with regard to intercompany obligations) are included in the calculation of the cumulative section 163(j) SRLY limitation. In addition, items of interest expense with regard to intercompany obligations are not characterized as business interest expense for purposes of the reduction described in the second sentence of this paragraph (d)(1)(A).
(B) Subgrouping. For purposes of this paragraph (d), the SRLY subgroup principles of § 1.1502-21(c)(2)(i) (with regard to carryovers of SRLY losses) apply with appropriate adjustments.
(2) Deduction of disallowed business interest expense carryforwards arising in a SRLY. Notwithstanding paragraph (d)(1) of this section, disallowed business interest expense carryforwards of a member arising in a SRLY are available for deduction by the consolidated group in the current year only to the extent the group has remaining section 163(j) limitation for the current year after the deduction of current-year business interest expense and disallowed business interest expense carryforwards from earlier taxable years that are permitted to be deducted in the current year (see paragraph (b)(3)(ii)(A) of this section). SRLY-limited disallowed business interest expense carryforwards are deducted on a pro rata basis (under the principles of paragraph (b)(3)(ii)(C)(3) of this section) with non-SRLY limited disallowed business interest expense carryforwards from taxable years ending on the same date. See also § 1.1502-21(b)(1).
(3) Examples. The principles of this paragraph (d) are illustrated by the following examples. For purposes of the examples in this paragraph (d)(3), unless otherwise stated, P, R, S, and T are taxable domestic C corporations that are not RICs or REITs and that file their tax returns on a calendar-year basis; none of P, R, S, or T qualifies for the small business exemption under section 163(j)(3) or is engaged in an excepted trade or business; all interest expense is deductible except for the potential application of section 163(j); and the facts set forth the only corporate activity.
(i) Example 1: Determination of SRLY limitation - (A) Facts. Individual A owns P. In 2021, A forms T, which pays or accrues a $100x business interest expense for which a deduction is disallowed under section 163(j) and that is carried forward to 2022. P does not pay or accrue business interest expense in 2021, and P has no disallowed business interest expense carryforwards from prior taxable years. At the close of 2021, P acquires all of the stock of T, which joins with P in filing a consolidated return beginning in 2022. Neither P nor T pays or accrues business interest expense in 2022, and the P group has a section 163(j) limitation of $300x in that year. This limitation would be $70x if determined by reference solely to T's items for all consolidated return years of the P group.
(B) Analysis. T's $100x of disallowed business interest expense carryforwards from 2021 arose in a SRLY. P's acquisition of T was not an ownership change as defined by section 382(g); thus, T's disallowed business interest expense carryforwards are subject to the SRLY limitation in paragraph (d)(1) of this section. T's cumulative section 163(j) SRLY limitation for 2022 is the P group's section 163(j) limitation, determined by reference solely to T's items for all consolidated return years of the P group ($70x). See paragraph (d)(1) of this section. Thus, $70x of T's disallowed business interest expense carryforwards are available to be deducted by the P group in 2022, and the remaining $30x of T's disallowed business interest expense carryforwards are carried forward to 2023. After the P group deducts $70x of T's disallowed business interest expense carryforwards, T's cumulative section 163(j) SRLY limitation is reduced by $70x to $0.
(C) Cumulative section 163(j) SRLY limitation of $0. The facts are the same as in Example 1 in paragraph (d)(3)(i)(A) of this section, except that T's cumulative section 163(j) SRLY limitation for 2022 is $0. Because the amount of T's disallowed business interest expense carryforwards that may be deducted by the P group in 2022 may not exceed T's cumulative section 163(j) SRLY limitation, none of T's carryforwards from 2021 may be deducted by the P group in 2022. Because none of T's disallowed business interest expense carryforwards are absorbed by the P group in 2022, T's cumulative section 163(j) SRLY limitation remains at $0 entering 2023.
(ii) Example 2: Cumulative section 163(j) SRLY limitation less than zero - (A) Facts. P and S are the only members of a consolidated group. P has neither current-year business interest expense nor disallowed business interest expense carryforwards. For the current year, the P group has a section 163(j) limitation of $150x, $25x of which is attributable to P, and $125x of which is attributable to S. S has $100x of disallowed business interest expense carryforwards that arose in a SRLY and $150x of current-year business interest expense. S's cumulative section 163(j) SRLY limitation entering the current year (computed by reference solely to S's items for all consolidated return years of the P group) is $0.
(B) Analysis. Under paragraph (d)(1) of this section, S's cumulative section 163(j) SRLY limitation is increased by $125x to reflect S's tax items for the current year. The P group's section 163(j) limitation permits the P group to deduct all $150x of S's current-year business interest expense. S's cumulative section 163(j) SRLY limitation is reduced by the $150x of S's business interest expense absorbed by the P group in the current year, which results in a −$25x balance. Thus, none of S's SRLY'd disallowed business interest expense carryforwards may be deducted by the P group in the current year. Entering the subsequent year, S's cumulative section 163(j) SRLY limitation remains −$25x.
(iii) Example 3: Pro rata absorption of SRLY-limited disallowed business interest expense carryforwards - (A) Facts. P, R, and S are the only members of a consolidated group, and no member has floor plan financing or business interest income. P has $60x of current-year business interest expense and $40x of disallowed business interest expense carryforwards from the previous year, which was not a separate return year. R has $120x of current-year business interest expense and $80x of disallowed business interest expense carryforwards from the previous year, which was not a separate return year. S has $70x of current-year business interest expense and $30x of disallowed business interest expense carryforwards from the previous year, which was a separate return year. The P group has a section 163(j) limitation of $300x, $50x of which is attributable to P, $90x to R, and $160x to S. S's cumulative section 163(j) SRLY limitation entering the current year (computed by reference solely to S's items for all consolidated return years of the P group) is $0.
Table 3 to Paragraph (d)(3)(iii)(A)
| Current-year business interest expense |
Disallowed business interest expense carryforwards from prior taxable year |
Section 163(j) limitation |
|
|---|---|---|---|
| P | $60x | $40x | $50x |
| R | 120x | 80x | 90x |
| S | 70x | (SRLY) 30x | 160x |
| Total | 250x | 150x | 300x |
(B) Analysis. Under paragraph (d)(1) of this section, S's cumulative section 163(j) SRLY limitation is increased in the current year by $160x. The P group's section 163(j) limitation permits the P group to deduct all $70x of S's current-year business interest expense (and all $180x of P and R's current-year business interest expense). S's cumulative section 163(j) SRLY limitation is reduced by the $70x of S's business interest expense absorbed by the P group in the current year, resulting in a $90x balance. Because the P group has $50x of section 163(j) limitation remaining after the absorption of current-year business interest expense, the P group can absorb $50x of its members' disallowed business interest expense carryforwards. Under paragraph (d)(2) of this section, SRLY-limited disallowed business interest expense carryforwards are deducted on a pro rata basis with other disallowed business interest expense carryforwards from the same taxable year. Accordingly, the P group can deduct $10x ($50x × ($30x/$150x)) of S's SRLY-limited disallowed business interest expense carryforwards. S's cumulative section 163(j) SRLY limitation is reduced (to $80x) by the $10x of SRLY-limited disallowed business interest carryforwards absorbed by the P group in the current year.
(C) Cumulative section 163(j) SRLY limitation of −$75x. The facts are the same as in Example 3 in paragraph (d)(3)(iii)(A) of this section, except that S's cumulative section 163(j) SRLY limitation entering the current year is −$75x. After adjusting for S's tax items for the current year ($160x) and the P group's absorption of S's current-year business interest expense ($70x), S's cumulative section 163(j) SRLY limitation is $15x (−$75x + $160x−$70x). Because S's cumulative section 163(j) SRLY limitation ($15x) is less than the amount of S's SRLY-limited disallowed business interest expense carryforwards ($30x), the pro rata calculation under paragraph (d)(2) of this section is applied to $15x (rather than $30x) of S's carryforwards. Accordingly, the P group can deduct $5.56x ($50x × ($15x/$135x)) of S's SRLY-limited disallowed business interest expense carryforwards. S's cumulative section 163(j) SRLY limitation is reduced (to $9.44x) by the $5.56x of SRLY-limited disallowed business interest carryforwards absorbed by the P group in the current year.
(e) Application of section 382 - (1) Pre-change loss. For rules governing the treatment of a disallowed business interest expense as a pre-change loss for purposes of section 382, see §§ 1.382-2(a) and 1.382-6. For rules governing the application of section 382 to disallowed disqualified interest carryforwards, see § 1.163(j)-11(c)(4).
(2) Loss corporation. For rules governing when a disallowed business interest expense causes a corporation to be a loss corporation within the meaning of section 382(k)(1), see § 1.382-2(a). For the application of section 382 to disallowed disqualified interest carryforwards, see § 1.163(j)-11(c)(4).
(3) Ordering rules for utilization of pre-change losses and for absorption of the section 382 limitation. For ordering rules for the utilization of disallowed business interest expense, net operating losses, and other pre-change losses, and for the absorption of the section 382 limitation, see § 1.383-1(d).
(4) Disallowed business interest expense from the pre-change period in the year of a testing date. For rules governing the treatment of disallowed business interest expense from the pre-change period (within the meaning of § 1.382-6(g)(2)) in the year of a testing date, see § 1.382-2.
(5) Recognized built-in loss. For a rule providing that a section 382 disallowed business interest carryforward (as defined in § 1.382-2(a)(7)) is not treated as a recognized built-in loss for purposes of section 382, see § 1.382-7(d)(5).
(f) Overlap of SRLY limitation with section 382. For rules governing the overlap of the application of section 382 and the application of the SRLY rules, see § 1.1502-21(g).
(g) Additional limitations. Additional rules provided under the Code or regulations also apply to limit the use of disallowed business interest expense carryforwards. For rules governing the relationship between section 163(j) and other provisions affecting the deductibility of interest, see § 1.163(j)-3.
(h) Applicability date. This section applies to taxable years beginning on or after November 13, 2020. However, taxpayers and their related parties, within the meaning of sections 267(b) and 707(b)(1), may choose to apply the rules of this section to a taxable year beginning after December 31, 2017, so long as the taxpayers and their related parties consistently apply the rules of the section 163(j) regulations, and, if applicable, §§ 1.263A-9, 1.263A-15, 1.381(c)(20)-1, 1.382-1, 1.382-2, 1.382-5, 1.382-6, 1.382-7, 1.383-0, 1.383-1, 1.469-9, 1.469-11, 1.704-1, 1.882-5, 1.1362-3, 1.1368-1, 1.1377-1, 1.1502-13, 1.1502-21, 1.1502-36, 1.1502-79, 1.1502-91 through 1.1502-99 (to the extent they effectuate the rules of §§ 1.382-2, 1.382-5, 1.382-6, and 1.383-1), and 1.1504-4, to that taxable year.
[T.D. 9905, 85 FR 56760, Sept. 14, 2020]