Page 115 - Large Business IRS Training Guides

Allocating Interest Expense –

After 163(j) limitation determined

If there is a section 163(j) limitation, the allowable

interest expense must be reallocated between

each activity for purposes of at risk (IRC § 465)

and passive activity loss (IRC § 469) limitations.

• The allocation method for 163(j) is different than the

allocation method for purposes of at risk and passive

activity loss limitations.

• See Treas. Reg. § 1.163-8T, Notice 88-37 and Notice

89-35 for more information.

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