Schedule AB Example: Add-Back Form (2025)
Alabama · Alabama DOR · Used for tax years 2025
This example of Alabama’s 2025 Schedule AB (Form 20C), Add-Back Form, 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 b
Who files this form
The 2025 Schedule AB is an add-back form for Form 20C taxpayers reporting intangible or interest expenses paid to related members. It identifies the related members who received the income and calculates exempt amounts.
The form states that Schedule AB must be attached to Form 20C.
What you'll need
Have the information requested on the form ready:
- The taxpayer’s name, FEIN and tax period.
- Each recipient related member’s name and FEIN.
- Intangible and interest expense amounts paid to each related member.
- For applicable exemptions, the jurisdictions where income is subject to tax, apportionment percentages, and apportioned or allocated income amounts.
- Related members’ intangible and interest receipts.
- Interest expense disallowed under IRC Section 163(j) and Section 163(j) carryforward amounts.
For the exemption described in the signature statement, an informed corporate officer must sign and provide a title and date.
How to file
Attach the completed Schedule AB to Form 20C. Complete the applicable exemption sections to determine the exempt amount of intangible or interest expense.
The supplied form does not provide a mailing address or e-filing directions.
Common mistakes
- Leaving Schedule AB off Form 20C. The form explicitly requires it to be attached.
- Claiming the exemption covered by the signature statement without meeting its conditions. To qualify for the exemption presented in §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 confirms 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
How do I calculate total expenses for each related member?
Add the intangible expenses on Line 2 and the interest expenses on Line 3. Enter the total on Line 4.
How do I choose the exempt amount on Line 11?
Enter the greatest amount from Lines 5f, 6, 10a or 10b.
How is the exempt portion of disallowed Section 163(j) interest calculated?
For Line 12a, divide Line 11 by Line 4, then multiply the result by Line 12. For the non-exempt portion on Line 12b, subtract Line 12a from Line 12.
How do I calculate the total exempt amount on Line 15?
Subtract Line 12a from Line 11 for each related member, then total those amounts for all related members from all pages.