Schedule PAB: Add-Back Form (2025)
Alabama · Alabama DOR · Used for tax years 2025
Alabama Schedule PAB reports intangible and interest expenses paid to related members and calculates the amount to add back on Form 65 or Form 20S. It accounts for exempt amounts, disallowed interest expense, and Section 163(j) carryforwards.
Who files this form
Schedule PAB is the add-back form for taxpayers filing Form 65 or Form 20S who paid interest or intangible expenses to related members. Complete a separate column for each recipient related member.
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:
- Your taxpayer name, FEIN, and tax period.
- Each recipient related member's name and FEIN.
- Intangible and interest expense amounts paid to each related member.
- Information for any applicable exemption, including taxing jurisdictions, apportionment percentages, allocated income, and related-member 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. Use additional Schedule PAB pages if needed for more related members.
How to file
Attach Schedule PAB to Form 65 or Form 20S. Complete one column for each recipient related member and attach additional pages as needed.
On page 1, calculate the totals on lines 14 and 15 using amounts for all related members from all pages. 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 give a mailing address or electronic filing instructions.
Common mistakes
- Leaving Schedule PAB unattached. The form must be attached to Form 65 or Form 20S.
- Combining related members in one column. Complete a separate column for each recipient related member, including disregarded entities and subchapter K entities separate from their owners.
- Omitting additional members. Attach additional pages as needed, use the continuation page only for additional members, and include all pages in the page 1 totals.
- Missing the special exemption signature requirement. To qualify for the exemption under Sections 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.
Questions people ask
What expenses does Schedule PAB report?
It reports intangible expenses and interest expenses paid to recipient related members. Enter these on lines 2 and 3, then add them on line 4.
What if I have more related members than fit on the first page?
Attach additional Schedule PAB pages. Complete one column for each recipient related member and include amounts from all pages in the page 1 totals.
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 on line 11.
When does a corporate officer need to sign?
For the exemption under Sections 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.
Where does the final add-back amount go?
Subtract line 15 from line 14. Enter the difference on Form 65, Schedule A, line 1, or Form 20S, Schedule A, line 2.