Lesson: Business Interest

In this lesson, Nick Palazzolo, CPA, delves into the intricacies of business interest, clarifying when and how it can be deducted on business tax returns. He distinguishes between personal and business interest deductions, underscoring the IRS’s intent to foster investment in business assets rather than personal expenditures. Nick elucidates the limitations on deductibility, such as the cap at 30% of adjusted taxable income plus certain specific inclusions and the carryforward provision of disallowed interest. Furthermore, he addresses the impact of average annual gross receipts on these limitations, providing an example to illustrate how different financial scenarios can affect a business's interest expense deduction. The session will help demystify the rules surrounding one of the more nuanced areas of corporate taxation.