Ask the Accountant: Can you clarify the new business interest expense limitation?

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The TCJA now limits deductions for business interest expense to an amount that is equal to interest income plus 30 percent of the taxpayer’s adjusted taxable income (essentially EBITDA through 2021, thereafter EBIT). Any business interest expense that exceeds the new Section 163(j) limit is carried forward indefinitely. The modifications to Section 163(j) apply to all businesses except those that are specifically exempt. There are five categories of exempt businesses: The trade of business of...

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