Adjusted taxable income is defined as follows for purposes of the business interest limitation:
A)taxable income allocable to the business computed without regard to interest income; depreciation, amortization, or depletion; interest expense; and net operating loss deductions.
B)30 percent of revenue after deducting depreciation and interest expense.
C)Taxable income allocable to debt invested in the business.
D)Interest income after deducting 30 percent of all deductible expenses.
E)None of the choices are correct.

Question

Quizplus · Accepted Answer

Adjusted taxable income is defined as taxable income allocable to the business computed without regard to interest income, depreciation, amortization, or depletion, interest expense, and net operating loss deductions. This definition is found in Section 163(j) of the Internal Revenue Code, which outlines the business interest limitation. The purpose of this definition is to determine the maximum amount of business interest expense that can be deducted in a tax year.

Adjusted Taxable Income Is Defined as Follows for Purposes of the Business