Page 229 - Large Business IRS Training Guides

Definition of Interest

Step 5: Determine whether taxpayer included all items

under the definition of interest in calculating business

interest income (BII) and business interest expense (BIE)

for IRC § 163(j) purposes including:

• Conventional interest

• The time value component associated with the loan

transaction relating to certain swaps with significant

non-periodic payments

• Other amounts that are closely related to interest

(interest equivalents),

• Anti-avoidance rule

Exam tip: Request business interest workpapers.

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