Page 312 - TaxAdviser_2022

INTEREST INCOME & EXPENSE

Excerpts from Form 1120

2021 practical 2022 practical
Line Label 2021: Topic 606 2022: Topic 606
expedient expedient
1 Gross receipts $1,000,000,000 $980,000,000 $1,000,000,000 $980,000,000
…
5 Interest income 0 20,000,000 0 20,000,000
…
11 Total income 400,000,000 400,000,000 400,000,000 400,000,000
…
Interest expense
18 37,500,000 50,000,000 22,500,000 36,500,000
(Form 8890, line 30)
…
27 Total deductions 362,500,000 375,000,000 347,500,000 361,500,000
…
30 Taxable income 37,500,000 25,000,000 52,500,000 38,500,000
Total tax
31 7,875,000 5,250,000 11,025,000 8,085,000
(21% rate assumed)

Excerpts from Form 8990

2021 practical 2021: 2022 practical 2022:
Line Label
expedient Topic 606 expedient Topic 606

Current-year business
1 $50,000,000 $50,000,000 $50,000,000 $50,000,000
interest expense
Section II Adjusted taxable income
22 Adjusted taxable income 125,000,000 105,000,000 75,000,000 55,000,000

Section IV 163(j) limitation calculation
26 30% of adjusted taxable income 37,500,000 31,500,000 22,500,000 16,500,000
27 Business interest income 0 20,000,000 0 20,000,000
Floor plan financing
28 0 0 0 0
interest expense
29 Total 37,500,000 51,500,000 22,500,000 36,500,000
…
Current-year business interest
30 37,500,000 50,000,000 22,500,000 36,500,000
expense deduction
Disallowed business
31 12,500,000 0 27,500,000 13,500,000
interest expense

32 June 2022 The Tax Adviser