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- The business interest expense limitation is calculated differently in the S Corp and C Corp modules, why?
The business interest expense limitation is calculated differently in the S Corp and C Corp modules, why?
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jchowe
Level 1
02-17-2022
03:03 PM
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I have a client who is an S Corp for federal taxes, but a C Corp for certain state taxes and is subject to the business interest expense limitation.
Though the input is the same in both programs, S Corp and C Corp in Lacerte, the Form 8990 is being calculated differently in each module resulting in a significant difference in the allowable interest expense.
The difference arises because the add back of interest included in line 8 of the C Corp Form 8990 includes both the current year and the prior year carryforward. In the S Corp module only the current year interest is being added back. In both modules the Taxable income on line 6 includes both the current and prior year amounts.
A calculation done with a worksheet included in the S Corp PPC Deskbook conforms with the C Corp calculation in Lacerte, and not the one in the Lacerte S Corp.
Has anyone encountered this situation and/or could explain why there are two different calculations being done for an S Corp and a C Corp. I cannot find any reason when reviewing the Form 8990 form instructions either.
Thanks.
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