# Prop. Treas. Reg. § 1.163(j)-2: Deduction for business interest expense limited.

Proposed regulation, not in force. REG-106089-18, 85 FR 56846, published 2020-09-14 <https://www.federalregister.gov/documents/2020/09/14/2020-16532/limitation-on-deduction-for-business-interest-expense-allocation-of-interest-expense-by-passthrough>. Interprets 26 U.S.C. § 163.

Par. 6. As added in a final rule published elsewhere in this issue of the Federal Register , effective November 13, 2020, § 1.163(j)-2 is amended by: 1. Adding paragraphs (b)(3)(iii) and (iv) and (d)(3). 2. Redesignating paragraph (k) as paragraph (k)(1). 3. Adding a new subject heading for paragraph (k). 4. Revising the subject heading of redesignated paragraph (k)(1). 5. Adding paragraph (k)(2). The additions and revision read as follows:

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(b) * * *

(3) * * *

(iii) Transactions to which section 381 applies. For purposes of the election described in paragraph (b)(3)(i) of this section, and subject to the limitation in paragraph (b)(3)(ii) of this section, the 2019 ATI of the acquiring corporation in a transaction to which section 381 applies equals the amount of the acquiring corporation's ATI for its last taxable year beginning in 2019.

(iv) Consolidated groups. For purposes of the election described in paragraph (b)(3)(i) of this section, and subject to the limitation in paragraph (b)(3)(ii) of this section, the 2019 ATI of a consolidated group equals the amount of the consolidated group's ATI for its last taxable year beginning in 2019.

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(d) * * *

(3) Determining a syndicate's loss amount. For purposes of section 163(j), losses allocated under section 1256(e)(3)(B) and § 1.448-1T(b)(3) are determined without regard to section 163(j). See also § 1.1256(e)-2(b).

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(k) Applicability dates.

(1) In general. * * *

(2) Paragraphs (b)(3)(iii), (b)(3)(iv), and (d)(3). Paragraphs (b)(3)(iii) and (iv) and (d)(3) of this section apply to taxable years beginning on or after [DATE 60 DAYS AFTER DATE OF PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER ]. However, taxpayers and their related parties, within the meaning of sections 267(b) and 707(b)(1), may choose to apply the rules of paragraphs (b)(3)(iii) and (iv) of this section to a taxable year beginning after December 31, 2017, and before [DATE 60 DAYS AFTER DATE OF PUBLICATION OF THE FINAL RULE IN THE FEDERAL REGISTER ], provided that they consistently apply the rules of paragraphs (b)(3)(iii) and (iv) of this section and the rules in the section 163(j) regulations for that taxable year and for each subsequent taxable year. Taxpayers and their related parties, within the meaning of sections 267(b) and 707(b), may choose to apply the rules of paragraph (d)(3) of this section to a taxable year beginning after December 31, 2017, and before [DATE 60 DAYS AFTER DATE OF PUBLICATION OF THE FINAL RULE  IN THE FEDERAL REGISTER ], provided that they consistently apply the rules of paragraph (d)(3) of this section for that taxable year and for each subsequent taxable year.