Interest Expense Limitation

Activating the EIFEL calculation

Administrators can enable the EIFEL (Excessive Interest and Financing Expenses Limitation) calculation from Calculation Options. Enabling this option activates the required system components and configuration settings for EIFEL processing.

Note: This setting is available only in Tax applications and can be modified by Administrators. The EIFEL calculation is disabled by default.

To activate the EIFEL calculation:

1. Navigate to Administration.
2. Expand System.
3. Select Calculation Options.
4. In the Calculation Options dialog, select EIFEL under Enable calculations.
5. Click OK.

When the EIFEL calculation is enabled, the system activates the associated EIFEL events, publishes related applications and reports, sets the EIFEL attribute value to TRUE, and updates the relevant source accounts and elements for book-tax difference calculations.

To disable the EIFEL calculation:

1. Navigate to Administration > System > Calculation Options.
2. Clear the EIFEL checkbox.
3. Click OK.

When the EIFEL calculation is disabled, the system deactivates EIFEL events, unpublishes related applications and reports, and sets the EIFEL attribute value to FALSE.

EIFEL calculation

The EIFEL (Excess Interest and Financing Expenses Limitation) calculation determines tax-related amounts based on interest limitation rules across entities and groups. It runs only when enabled, ensuring all configured settings and conditions are applied correctly.

The EIFEL calculation runs only when the ASTaxCalcEIFEL setting is enabled (TRUE). If this setting is disabled (FALSE), the calculation will not be performed.

EIFEL Calculation Overview and Conditions

When triggered, the system calculates the following:

• IFE amount (Interest and Financing Expenses)
• IFR amount (Interest and Financing Revenues)
• ATI amount (Adjusted Taxable Income)
• Excess Capacity (EC)

  • EC is calculated only when the group election is not taken; otherwise, it is set to zero.

• Absorbed Capacity (AC)
  • AC is calculated as AC – Amount A when the group election is not taken.
  • If the group election is applied, the calculated AC value is set to zero, and the group ratio amount is applied as an adjustment instead.
• Cumulative Excess Capacity
• RIFE deductible under paragraph 111(1)(a.1)
• Proportion (as per subsection 18.2(2))
• Excess IFE (EIFE) under subsection 18.2(2)
• Partnership IFE add-back (paragraph 12(1)(l.2))
• RIFE under subsection 111(8)

All calculated results are stored in IEL.C.

The calculation is triggered when changes occur in EIFEL writable accounts or in IEL.T. Additionally, if triggered by EIFEL.EC.Ratio, the system recalculates all valid entities.

Execution Rules

The calculation runs under the following conditions:

• For leaf entities where AZTaxCalcIEL = EIFEL:
  • If the entity belongs to a group, the system applies the group-level settings when the group is configured for EIFEL.
  • If the group configuration is NULL, the system applies the entity-level settings instead.
• For the target entity of a Legal Entity Group where AZTaxCalcIEL = EIFEL.

EIFEL Input and Report

EIFEL - Ratio of Permissible Expenses

The ratio of permissible expenses is used within EIFEL calculations. An input application has been provided to allow users to update this ratio for specific reporting periods, if required. You can set or update the ratio using:

• EIFEL – Ratio of Permissible Expenses input app found in Tax Provision > Data Collection > Rates.

The ratio is stored at: EIFEL.EC.Ratio / Selected Period / DIM2SET / DIM3SET / DIM4SET / DIM5SET / DIM6SET / DIM7SET. Once set, the ratio is carried forward to future periods by the tax rollover process.

EIFEL Input

The EIFEL Input App allows users to enter and review EIFEL-related financial data for a selected period and entity.

To update the EIFEL input app:

1. In the Tax Provision navigation pane, click Data Collection.
2. Expand Common.
3. Use the drop-down list or the symbol selector to select the appropriate entity. For more information, see Using the Symbol Selector.
4. Click EIFEL.lvapp. The input app opens in the workspace.

The grid is organized into three columns:

1. Calculated - It displays system-generated values and is read-only.
2. Adjustment - It allows users to enter or modify values and is the only editable field.
3. Total - The Total column shows the final value, which is automatically calculated as the sum of the Calculated and Adjustment values.The results of the EIFEL calculation are updated as adjustments are made.

Period and Entity Selection

Data can be entered for a selected tax period (CYTAXPER###) and is limited to entities enabled for EIFEL. This includes leaf entities under TENTITIES and legal entity groups where AZTaxCalcIEL = EIFEL. For legal entity groups, data must be entered at the calculation entity defined by AZTaxCalcEntity.

EIFEL Report

Use this report to review EIFEL results at both leaf and parent entity levels.

When viewing the report at a parent level, it also displays the ‘Proportion determined under subsection 18.2(2) (Calculated)’. As this value is calculated within the report, it does not follow the same restrictions as the underlying calculation (for example, it is not limited to a minimum value of 0).

To review the EIFEL Report:

1. In the Tax Provision navigation pane, click Reports.
2. Expand Common.
3. Use the drop-down list or the symbol selector to select the appropriate entity. For more information, see Using the Symbol Selector.
4. Click EIFEL.rtp. The report opens in the workspace.

Manage Interest Expense Limitation Accounts

The Interest Expense Limitation Accounts app is used to:

• Import accounts from a file to update the Interest Expense Limitation Accounts.
• Manage the Interest Expense Limitation Accounts.
• Export the accounts to a file for import to another system.

EIFEL Hierarchy Maintenance

You can use the Hierarchy Editor to manage accounts within the EIFEL hierarchy, including creating and organizing both parent and leaf members.

Account management is available only within the following sub-hierarchies:

• EIFEL.IFE.A
• EIFEL.IFE.B
• EIFEL.IFR.A
• EIFEL.IFR.B
• EIFEL.ATI.A.ADJ
• EIFEL.ATI.B
• EIFEL.ATI.C

Note: The root symbol of a selected sub-hierarchy cannot be modified. However, you can add both parent and leaf symbols within the selected sub-hierarchy.

All accounts are displayed in the Hierarchy Editor with their name, description, and priority.

Newly created accounts are assigned a STANDARD type and are automatically assigned to writable and translation hierarchies.

Importing Manage Interest Expense Limitation Accounts

The import option in the Manage Interest Expense Limitation Accounts dialog allows you to create and update Interest Expense Limitation Accounts in the database from a .csv file.

To import accounts:

1. Click on Manage Interest Expense Limitation Accounts. A prompt appears.
2. In Option, select Import.
3. Select the .csv file to import from.
4. To skip confirmation of each new parent assignment, check the Automatically confirm parent assignment option.
5. Click OK. A table will be displayed showing the summary of all actions performed by the import.

.csv file example

where:

Managing Interest Expense Limitation Accounts

The Manage Interest Expense Limitation Accounts app provides the ability to create and modify custom accounts as well as the ability to edit the properties of existing accounts where permitted.

The Manage option in the Manage Interest Expense Limitation Accounts dialog allows you to create and update accounts from within the EIFEL hierarchy.

To manage accounts:

1. Click on Manage Interest Expense Limitation Accounts. A prompt appears.
2. In Option, select Manage.

3. In Accounts, select the Interest Expense Limitation account you want to manage from the drop-down list (for example, EIFEL.IFE.A, EIFEL.IFR.B, or EIFEL.ATI.C). Click the Search icon, if required, to locate a specific account.

4. In the Manage Interest Expense Limitation Accounts table, the hierarchy of the account selected is displayed.

Working with the hierarchy

The Manage Interest Expense Limitation Accounts table displays the selected account in a hierarchical view. The view is initially expanded two levels below the selected account.

To change the level of expansion:

1. Click a collapsed hierarchy icon to expand the hierarchy one level below the selected symbol.
2. Click an expanded hierarchy icon to collapse the hierarchy to the selected symbol.
3. Right-click on the top row and select one of these options:
   • Expand All for Selected Row - to expand the entire hierarchy below the selected symbol.
   • Collapse All - to collapse the entire hierarchy.
4. Right-click on a parent row and select one of these options:
   • Expand All for Selected Row - to expand the entire hierarchy below the selected symbol.
   • Collapse All - to collapse the entire hierarchy.
   • Collapse Parent - to collapse the hierarchy to the parent of the selected symbol.
   • Expand All for Selected Row - to expand the entire hierarchy below the selected symbol.
   • Collapse All - to collapse the entire hierarchy.
   • Collapse Parent - to collapse the hierarchy to the parent of the selected symbol.
5. Right-click on a leaf row and select one of these options:
   • Collapse All - to collapse the entire hierarchy.
   • Collapse Parent - to collapse the hierarchy to the parent of the selected symbol.

Adding an account

To add a new account:

1. Select a row in the table. The new account will be assigned as a child of the selected account.

   Note: You can add a new account that has similar settings to an existing account by selecting a row and clicking duplicate.

2. Click Add. The Add dialog appears.
3. Fill in the following fields:

   1. Name: Enter the name of the new account. The name of the account is limited to 31 characters.

   2. Description: Enter a description for the new account. The description of the account is limited to 100 characters.

   3. Sort Order: Enter a number to define the order of the new account under the parent. Accounts are sorted from low to high. Accounts added with a sort order of 0 will appear last, in the order the account was created.

4. Click OK to add the new symbol to the table.

   Note: Accounts are not added to the database until you click Apply.

Modifying an existing account

You can change the properties of an existing account:

1. Modify the description by editing the value in the Description cell.
2. Change the order the account appears under its parent by modifying the sort order value.
3. To change the parent of an account:
   1. Select the row in the table.
   2. Click Edit. The Edit dialog appears.
   3. Enter or select a new parent.
   4. Click OK.

No changes are made to the database until you click Apply.

Applying changes

To apply changes to the accounts click Apply.

For new rows in the table:

• Each new account will be added under the selected parent symbol.

For modified accounts:

• Any description changes will be applied.
• If the parent account is changed, the account will be reassigned to the new parent with the specified sort order.
• Any changes to the sort order (same parent account) will be applied.

Results:

• All actions performed are presented at the end of processing with:
  • Each row identified by its symbol name.
  • The action performed or the reason any error occurred.
• Any valid changes, not cancelled, are applied.

Refreshing the accounts

Click Refresh to refresh the list of accounts.

Click Symbols to change the selected account and refresh the list of accounts.

In either case, if there are any unapplied changes, you will be prompted to apply or discard any changes that have not yet been applied.

• Choose Apply Changes to apply any changes made, then refresh the list of accounts. If there are any errors the refresh will not be performed.
• Choose Discard Changes to discard any changes made, then refresh the list of accounts.
• Click Cancel to return to the table without refreshing the list of accounts.

Exporting from Manage Interest Expense Limitation Accounts table

1. Click Export to export from the accounts table to a .csv file.
2. Select the .csv file to export to.

   Note: If the file selected does not currently exist, it will be created during the export process.

3. Click OK. A confirmation dialog will appear.
4. Click View File to view the exported file.

Manage Interest Expense Limitation Automations

Interest Expense Limitation accounts can be calculated instead of being manually entered or imported. The Manage Interest Expense Limitation Automations feature allows you to configure accounts to be calculated using source data from your trial balance or tax provision results.

Automation is supported for leaf accounts within the following sub-hierarchies: EIFEL.IFE.A, EIFEL.IFE.B, EIFEL.IFR.A, EIFEL.IFR.B, EIFEL.ATI.A.ADJ, EIFEL.ATI.A.001, EIFEL.ATI.B, and EIFEL.ATI.C.

Interest Expense Limitation automations are period specific and can be overridden:

• For an entity.
• For an automation group if automation groups exist.
  • Entity overrides supersede automation group overrides.

To manage automations:

1. Click on Manage Interest Expense Limitation Automations. A prompt appears.

2. In Accounts, select the Interest Expense Limitation account you want to manage.

3. In Time Period, select the period for which you want to update automations.Click OK.

4. In the Manage Interest Expense Limitation table, the current automations for the selected accounts are displayed.

Managing default settings

1. From the Default Settings tab, click Add to add automation default settings for an account. Automation settings are not added to the database until you click Apply.

Note: You can add settings on an account that has similar settings to another account by selecting an existing row and clicking duplicate.

2. For each account, fill in the following fields:

   1. Account: Select the account for which you would like to set default automation settings.

   2. Automate: Check this option if this account will be automated. For the default settings, the automation check box is selected by default. Automated accounts will have data automatically transferred from the defined source to the target account.

   3. Method: This column provides a dropdown with two options:

      • Year-To-Date Balance – Select this option when the target account should use the current period YTD balance.

      • Change in Balance – Select this option when the target account should reflect the difference between the current period value and the prior period value.

   4. %: Enter the percentage you want to apply to the source amount prior to transferring it to the target account. The % value entered must be a number between -100 and 100.

   5. Source Accounts: Specify the source account(s). You can select one or more parent or leaf symbols.

   6. Source DETAILS: Specify the source detail symbol(s). The source details column will display if attribute DETAILST is set to a parent symbol or contains multiple symbols.

   7. Source SEGMENTS: Specify the source segment symbol(s). The source segments column will display if attribute SEGMENTST is set to a parent symbol or contains multiple symbols.

   8. Source ELEMENTS: Specify the source element symbol(s). The source elements column will display if attribute SUMMELE is set to a parent symbol or contains multiple symbols.

Managing override settings

1. From either the Group Override or Entity Override tab, click Add to add new override settings. Override settings are not added to the database until you click Apply.

2. For each account, fill in the following fields:

   1. Account: Select the account for which you would like to set override automation settings.

   2. Automation Group/Entity: If on the Group Override tab, select the automation group you would like to set override settings for. If on the Entity Override tab, select the entity you would like to set override settings for.

   3. Automate: Check this option if this account will be automated at the override level. Automated accounts will have data automatically transferred from the defined source to the target account.

   4. Method: It defines how the system calculates the value that will be written to the target account when automation is enabled at the override level. This field is available only when Automate is checked for the selected account.This column provides a dropdown with two options:

      • Year-To-Date Balance

      • Change in Balance

   5. %: Enter the percentage you want to apply to the source amount prior to transferring it to the target account. The % value entered must be a number between -100 and 100.

   6. Source Accounts: Specify the source account(s). You can select one or more parent or leaf symbols.

   7. Source DETAILS: Specify the source detail symbol(s). The source details column will display if attribute DETAILST is set to a parent symbol or contains multiple symbols.

   8. Source SEGMENTS: Specify the source segment symbol(s). The source segments column will display if attribute SEGMENTSTis set to a parent symbol or contains multiple symbols.

   9. Source ELEMENTS: Specify the source element symbol(s). The source elements column will display if attribute SUMMELE is set to a parent symbol or contains multiple symbols.

Modifying an account

You can change the properties of an existing account:

1. Change the automation setting on the account by checking or un-checking the automate option.

2. Change the 'Method' to be used by selecting a different option.

3. Change the % to be used in the automation calculation by modifying the % value.
4. Change the source account(s) by selecting different source account symbols.
5. Change source details, segments, or elements symbol(s) by selecting different source symbols.

No changes are applied until you click Apply.

Applying changes

To apply changes to the automation settings, click Apply.

• Any changes to the ‘Automate’ setting will be applied.
• Any changes to the ‘Method’ setting will be applied.
• Any changes to the ‘%’ setting will be applied.
• Any changes to the ‘Source Accounts’ setting will be applied.
• Any changes to the source details, segments, or elements settings will be applied.

Refreshing the automations

Click Refresh to refresh the list of automation settings.

If there are any unapplied changes, you will be prompted to apply or discard any changes that have not yet been applied.

• Choose Apply Changes to apply any changes made, then refresh the list of automation settings. If there are any errors the refresh will not be performed.
• Choose Discard Changes to discard any changes made, then refresh the list of accounts.
• Click Cancel to return to the table without refreshing the list of accounts.

Deleting automation settings

You can delete an automation setting at the default automation group override or entity override level:

1. Highlight the row you want to delete.
2. Click the delete button.
3. Automation settings are not deleted until you click Apply.

Exporting and importing automation settings

There may be occasions when you need to manually copy automation settings between periods or Longview instances. You can use export and import to accomplish this.

To export automation settings:

1. 1. In Longview Client navigate to Tax Provision > Administration and expand the Import and Export folder.
2. Click Export Tax Automations. The Export Tax Automations form appears.

3. Select the Interest Expense Limitation account for which you want to export automation settings.

4. Select the Time Period for exporting automation settings. By default, the current period is selected.
5. Click OK. The automation settings are exported to a file and a confirmation dialog appears.
6. You can:
   1. Click View File to open the automation settings file in your default comma-separated values (.csv) editor.
   2. Click Close to exit the process.

To import automation settings:

1. In Longview Client navigate to Tax Provision > Administration and expand the Import and Export folder.
2. Click Import Tax Automations. The Import Tax Automations form appears.

3. Select the Interest Expense Limitation account for which you want to import automation settings.

4. Select the Time Period for importing automation settings. By default, the current period is selected.
5. Select the File.
6. Click OK. The automation settings are imported from the selected file and a confirmation dialog appears.
7. Click Close to exit the process.

.csv file example

where: