HOW DOMESTIC BUSINESSES DEDUCT BUSINESS INTEREST EXPENSES UNDER THE NEW SECTION 163(J).

Although the Tax Cuts and Jobs Act (TCJA) 2017 contains many favorable business tax provisions such as a flat 21 percent tax rate for C corporations as well as the elimination of the corporate alternative minimum tax (AMT); it also creates new unfavorable limitations on business expense deductibility. For example, the TCJA (2017) amends the Internal Revenue Code (IRC) section 163(j) to reduce the deductibility for net business interest expense. Due the complexity of section 163(j), both the Treasury and the Internal Revenue Services (IRS) have issued numerous regulations detailing the application of section 163(j) as amended by the TCJA (2017). C corporations, S Corporations and partnerships implement the provisions of section 163(j) in different ways. This paper summarizes these varying implementations including the use of a real-life case. The application of section 179 (immediate expense), section 274 (food and beverage for employees) as well as section 163(j) (interest expense) are also examined. Finally, this paper updates readers with the newest guidance from the IRS on the Coronavirus Aid, Relief, and Economic Security Act (2020) in relation to section 163(j). [ABSTRACT FROM AUTHOR]