Page 145 - Large Business IRS Training Guides
P. 145
Allocation Rules
• The taxpayer allocates tax items between its excepted and
non-excepted trades or businesses in the manner set forth in
Prop. Treas. Reg. § 1.163(j)-10 to determine its IRC § 163(j)
limitation.
• Allocation rules are generally broken into three categories:
• Interest Income and interest expense are allocated based
on adjusted tax basis of the assets in the trade or
business.
• Tax items other than interest income and interest expense
have varying rules on how they should be allocated.
• Interest expense from qualified nonrecourse indebtedness
use direct allocation.
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