1. Short title This Act may be cited as the Tax Fairness and Transparency Act . 2. Limitation on interest deduction for excessive interest of members of financial reporting groups (a) In general Section 163 of the Internal Revenue Code of 1986 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following: (n) Limitation on excessive interest of members of financial reporting groups (1) Limitation (A) In general If this subsection applies to any corporation for any taxable year, no deduction shall be allowed under this chapter for the taxable year for interest expense to the extent that such expense exceeds the sum of— (i) the amount of interest on indebtedness of the corporation includible in the corporation’s gross income for the taxable year, plus (ii) the corporation’s proportionate share of the financial reporting group’s net interest expense for the taxable year computed under United States income tax principles. (B) Proportionate share of net interest expense For purposes of subparagraph (A)(ii)— (i) In general A corporation’s proportionate share of the financial reporting group’s net interest expense means the amount equal to the percentage of the group’s net interest expense which bears the same percentage as the corporation’s earnings bears to the group’s earnings. (ii) Earnings For purposes of clause (i), earnings shall be the sum of net earnings plus net interest expense, taxes, depreciation, and amortization. (iii) Determinations relating to earnings For purposes of clause (ii), earnings, net interest expense, taxes, depreciation, and amortization with respect to a financial reporting group shall be as reflected on the financial reporting group’s financial statements for the taxable year ending in the taxable year of the corporation. (C) Alternative determination In lieu of the limitation in subparagraph (A), if— (i) a corporation fails to substantiate the corporation’s proportionate share of the financial reporting group’s net interest expense for a