What is Form 8990? Who must file Form 8990?
Per the IRS, Form 8990 is used to calculate the amount of business interest expense that can be deducted and the amount to carry forward to the next year. Beginning in tax year 2018, Form 8990, "Limitation on Business Interest Expense Under Section 163(j)", is available for use and filing in the 1040, 1120, 1120-S, and 1065 return types.
The CARES Act, section 2306, modified the limitation on business interest expense for taxable years beginning in 2019 and 2020 by providing an option for certain taxpayers to elect for the Limitation on Business Interest Expense on line 26, page 2, of Form 8990 to be calculated at 50% rather than 30%. To elect the 50% limitation, check the box at the bottom of the 8990 screen. See Related Links below for details.
The data entry screen 8990 is located on:
- the Other Forms tab in a 1040, 1065, and 1120-S.
- the second Other Forms tab in an 1120.
When completing screen 8990 in Drake Tax, be sure to read the Important disclaimer at the top of the screen for guidance on entering the data. See the 8990 Instructions for details.
Note 654 will be produced on any individual, corporate, or tax-exempt return where the business income exceeds $10 million - you should review the return to determine if Form 8990 would be needed.
Small business taxpayers are not subject to the limitations on Form 8990. If the taxpayer falls into this category, they would not be required to file Form 8990. The section on "who must file" indicates that some taxpayers are not subject to filing this form. See the 8990 Instructions for further information.