What is the definition of "taxable income" under 163(j)? Can "taxable income" be negative? According to Lacerte and the instructions all amounts should be entered as positive https://www.irs.gov/pub/irs-pdf/i8990.pdf (page 5 section 2).
This could have a difference. For example, say taxable income is -150,000 for a partnership but depreciation expense is 200,000 and interest expense is say $50,000. This would mean ATI would be -150+200+50 = 100k x 30% = 30k; interest limited by 20k.
If taxable income is limited to 0, then ATI would be 0 + 200 + 50 = 250k x 30% = 75k thus no interest limit.
All comes down to the definition of "taxable income."
The instructions specifically state that Line 6 should be entered as a positive amount unless otherwise indicated. This seems incorrect but Lacerte maintains it should be either 0 or above and not negative.
Any thoughts on this?