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Video instructions and help with filling out and completing Why Form 5495 Limitation

Instructions and Help about Why Form 5495 Limitation

Hi in this module I'm discussing the limitations on the deduction of business interest this is an area that has changed quite a bit for businesses in the initial political talk there was quite a bit of rhetoric about how we were going to lower the corporate tax rate but closed a lot of loopholes well this is a very big loophole but they're attempting to close throughout this module I'm going to start with corporations and then adding a little bit about flow-through entities that applies to both partnerships and S corporations and then finally add some specifics that apply only to partnerships so this is a bit of a complex module and it's a good one to take notes on now the corporate interest expense abduction is now much more limited than what it was in the past the pre 2023 law says interest paid or accrued is generally deductible but with some limitations in certain cases these limitations are where interest is paid or accrued and is disallowed because the corporation is something called a thinly capitalized corporation it's very thinly capitalized you would see this where maybe somebody wanted to form a corporation for example and took a million dollars to do it and so they sold themselves one shares stock at what dollar so shareholder and then run the corporation of 999,999 dollars well of course when you start looking at that and say oh of course you couldn't do that then the owner comes back and says ok I'll sell a share of stock the two dollars and then load myself the rest at eight dollars and there's some kind of bargaining as to what's reasonable and that reasonableness line has never really clarified anywhere its flaws I qualify through a small body of...

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