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139 STAT. 207 PUBLIC LAW 119–21—JULY 4, 2025 (2) Section 59A(h)(2)(B) is amended by striking ‘‘section 6038B(b)(2)’’ and inserting ‘‘section 6038A(b)(2)’’. (3) Section 59A(i)(2) is amended— (A) by striking ‘‘subsection (g)’’ and inserting ‘‘sub- section (h)’’, and (B) by striking ‘‘subsection (g)(3)’’ and inserting ‘‘sub- section (h)(3)’’. (d) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after December 31, 2025. PART IV—BUSINESS INTEREST LIMITATION SEC. 70341. COORDINATION OF BUSINESS INTEREST LIMITATION WITH INTEREST CAPITALIZATION PROVISIONS. (a) IN GENERAL.—Section 163(j) is amended by redesignating paragraphs (10) and (11) as paragraphs (11) and (12) and by inserting after paragraph (9) the following: ‘‘(10) COORDINATION WITH INTEREST CAPITALIZATION PROVI- SIONS.— ‘‘(A) IN GENERAL.—In applying this subsection— ‘‘(i) the limitation under paragraph (1) shall apply to business interest without regard to whether the taxpayer would otherwise deduct such business interest or capitalize such business interest under an interest capitalization provision, and ‘‘(ii) any reference in this subsection to a deduction for business interest shall be treated as including a reference to the capitalization of business interest. ‘‘(B) AMOUNT ALLOWED APPLIED FIRST TO CAPITALIZED INTEREST.—The amount allowed after taking into account the limitation described in paragraph (1)— ‘‘(i) shall be applied first to the aggregate amount of business interest which would otherwise be capital- ized, and ‘‘(ii) the remainder (if any) shall be applied to the aggregate amount of business interest which would be deducted. ‘‘(C) TREATMENT OF DISALLOWED INTEREST CARRIED FORWARD.—No portion of any business interest carried for- ward under paragraph (2) from any taxable year to any succeeding taxable year shall, for purposes of this title (including any interest capitalization provision which pre- viously applied to such portion) be treated as interest to which an interest capitalization provision applies. ‘‘(D) INTEREST CAPITALIZATION PROVISION.—For pur- poses of this section, the term ‘interest capitalization provi- sion’ means any provision of this subtitle under which interest— ‘‘(i) is required to be charged to capital account, or ‘‘(ii) may be deducted or charged to capital account.’’. (b) CERTAIN CAPITALIZED INTEREST NOT TREATED AS BUSINESS INTEREST.—Section 163(j)(5) is amended by adding at the end the following new sentence: ‘‘Such term shall not include any interest which is capitalized under section 263(g) or 263A(f).’’. Definition. Applicability. 26 USC 59A note.