The cap applies whether the interest is deducted or capitalized
What the document says“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”
The section inserts a new paragraph (10) into section 163(j) of the Internal Revenue Code of 1986, renumbering the paragraphs that follow. The limitation applies to business interest whether the taxpayer would deduct it or add it to the cost of an asset under an interest capitalization provision, and any reference in the subsection to a deduction for business interest includes the capitalization of business interest.
What the document actually says“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”
The cap applies to business interest either way. It does not matter whether the firm would deduct it or add it to an asset's cost.
Capitalizing interest means adding it to what an asset cost. That used to sit outside the cap. Now both routes are treated the same.
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