Schedule PAB Example: Add-Back Form (2025)
Alabama · Alabama DOR · Used for tax years 2025
Schedule PAB is Alabama’s add-back schedule for Forms 65 and 20S. This completed example shows how to report interest and intangible expenses paid to related members, calculate exempt amounts, and account for disallowed interest and carryforwards to determine the add-back amount.
Who files this form
Schedule PAB is the add-back form for Forms 65 and 20S. It reports intangible and interest expenses paid to recipient related members and calculates the amount to add back.
The form defines related members to include corporations, associations, disregarded entities, and subchapter K entities. Disregarded entities and subchapter K entities are treated as related members separate from their owners.
What you'll need
Have the following information ready to complete Schedule PAB:
- Your taxpayer name, FEIN, and tax period.
- Each recipient related member’s name and FEIN.
- Intangible and interest expense amounts paid to each recipient.
- Information for any applicable exemption, including taxing jurisdictions, apportionment percentages, allocated income, and recipient receipts.
- Interest expense disallowed under IRC Section 163(j) and Section 163(j) carryforward amounts.
Schedule PAB must be attached to Form 65 or Form 20S.
How to file
Attach Schedule PAB to Form 65 or Form 20S.
Subtract Line 15 from Line 14 and enter the difference on:
- Form 65, Schedule A, Line 1; or
- Form 20S, Schedule A, Line 2.
The supplied form does not provide a mailing address or e-file directions.
Common mistakes
- Leaving out a recipient’s column. Complete a separate column for each recipient related member.
- Treating certain entities as part of their owners. The form treats disregarded entities and subchapter K entities as related members separate from their owners.
- Missing the exemption signature requirement. 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 Schedule PAB under penalty of perjury.
- Forgetting the attachment. Schedule PAB must be attached to Form 65 or Form 20S.
Questions people ask
Do I need a separate column for each related member?
Yes. The form requires a column for each recipient related member.
How do I calculate total expenses on Line 4?
Add the intangible expenses on Line 2 and the interest expenses on Line 3 for that recipient.
How do I determine the exempt amount on Line 11?
Complete the applicable exemption sections, then enter the greatest amount from Lines 5f, 6, 10a, or 10b.
What does the corporate officer’s signature certify?
For the exemption under §40-18-35(b)(3) and §40-18-24(e), 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. The officer signs under penalty of perjury, and Line 10b must be greater than zero to qualify.