Schedule AB Example: Add-back Form (2024)
Alabama · Alabama DOR · Used for tax years 2024
This completed example of Alabama’s 2024 Schedule AB (Form 20C) shows how to report intangible and interest expenses paid to related members and calculate exempt amounts. It also accounts for interest disallowed under IRC Section 163(j) and carryforwards. Schedule AB must be atta
Who files this form
Schedule AB (Form 20C) is Alabama’s Add-Back Form for reporting intangible and interest expenses paid to related members and calculating exempt amounts. The 2024 form states that it must be attached to Form 20C.
What you'll need
Have the following information ready to complete Schedule AB:
- Your taxpayer name, FEIN and tax period.
- Each recipient related member’s name and FEIN.
- Intangible and interest expenses paid to each related member.
- For applicable exemptions, the jurisdictions where income is subject to tax, apportionment percentages, and amounts apportioned or allocated.
- Related-member receipt amounts requested on the form.
- Interest expense disallowed under IRC Section 163(j) and Section 163(j) carryforward amounts.
The form also includes spaces for a corporate officer’s signature, title and date when the specified exemption requires certification.
How to file
Attach Schedule AB to Form 20C. The supplied form does not give a mailing address or electronic filing instructions.
Complete the applicable exemption sections. To qualify for the exemption described under §40-18-35(b)(3) and §40-18-24(e), Line 10b must be greater than zero and an informed corporate officer must sign Schedule AB under penalty of perjury.
Common mistakes
- Leaving Schedule AB unattached. The form states that it must be attached to Form 20C.
- Missing the required exemption certification. For the exemption under §40-18-35(b)(3) and §40-18-24(e), Line 10b must be greater than zero and an informed corporate officer must sign under penalty of perjury. The signature certifies that tax avoidance was not a principal motivating factor in the transactions giving rise to the related member’s interest or intangible expenses and costs.
Questions people ask
What expenses go on Lines 2 and 3?
Enter intangible expenses paid to the recipient related member on Line 2 and interest expenses paid to that member on Line 3. Add them together on Line 4.
How do I determine the exempt amount on Line 11?
Complete the applicable exemption sections, then enter the greatest of Lines 5f, 6, 10a or 10b.
How is disallowed Section 163(j) interest split between exempt and non-exempt amounts?
Line 12a is Line 11 divided by Line 4, multiplied by Line 12. Line 12b is Line 12 minus Line 12a.
How do I calculate the total exempt amount on Line 15?
Total Line 11 minus Line 12a for all related members from all pages.