8531 / What is deductible trade or business interest?

Trade or business interest, as the name suggests, includes any interest incurred in the conduct of a trade or business. So, for example, if a taxpayer borrows funds for working capital in a trade or business, the interest payments would be deductible to a certain extent. The 2017 tax reform legislation modified the tax treatment of trade or business income based upon whether the trade or business is organized as a corporation, or as a pass-through entity (i.e., a partnership or S corporation). Modifications to the deductibility of business interest are discussed in Q to Q .