Schedule AB: Add-Back Form with Instructions (2025)
Alabama · Alabama DOR · Used for tax years 2025
Alabama Schedule AB is an add-back schedule attached to Form 20C. It reports interest and intangible expenses paid to related members, calculates exempt amounts, and accounts for interest disallowed under Section 163(j) and carryforwards.
Who files this form
Schedule AB is the add-back form for Form 20C taxpayers reporting interest or intangible expenses paid to related members.
Complete a separate column for each related member that received interest or intangible income from the taxpayer. Schedule AB must be attached to Form 20C.
What you'll need
Have the following information ready to complete Schedule AB:
- 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 recipient’s taxing jurisdictions, apportionment percentages, allocated income, and receipt amounts.
- Interest expense disallowed under IRC Section 163(j) and Section 163(j) carryforward amounts.
Use additional Schedule AB pages if needed for more related members.
How to file
Attach Schedule AB to Form 20C. Complete one column for each recipient related member, and attach additional Schedule AB pages as needed. Use the additional-member page only for additional members.
Report the combined amounts from all pages on page 1, lines 14 and 15, using the calculations printed on those lines.
The supplied form does not give a mailing address or e-filing directions.
Common mistakes
- Leaving Schedule AB unattached. The form states that it must be attached to Form 20C.
- Omitting a recipient related member. Complete a column for each recipient and attach additional pages as needed.
- Leaving additional-page amounts out of the totals. Include all related members from all pages in the page 1 totals.
- Claiming the exemption under §40-18-35(b)(3) and §40-18-24(e) without meeting the printed conditions. Line 10b must be greater than zero, and an informed corporate officer must sign Schedule AB under penalty of perjury.
Questions people ask
What if I need space for more related members?
Attach additional Schedule AB pages. Complete one column for each recipient related member and include amounts from all pages in the page 1 totals.
How do I calculate total expenses for each related member?
Add the intangible expenses on line 2 to the interest expenses on line 3. Enter the total on line 4.
What amount goes on line 11?
Enter the greatest amount from lines 5f, 6, 10a, or 10b as the exempt amount.
When is a corporate officer’s signature required?
To qualify 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 confirms that tax avoidance was not a principal motivating factor for the transactions giving rise to the related member’s interest or intangible expenses and costs.