year. The amount determined under subparagraph (B) shall not be less than zero. (2) Carryforward of disallowed business interest The amount of any business interest not allowed as a deduction for any taxable year by reason of paragraph (1) shall be treated as business interest paid or accrued in the succeeding taxable year. (3) Exemption for certain small businesses In the case of any taxpayer (other than a tax shelter prohibited from using the cash receipts and disbursements method of accounting under section 448(a)(3)) which meets the gross receipts test of section 448(c) for any taxable year, paragraph (1) shall not apply to such taxpayer for such taxable year. In the case of any taxpayer which is not a corporation or a partnership, the gross receipts test of section 448(c) shall be applied in the same manner as if such taxpayer were a corporation or partnership. (4) Application to partnerships, etc (A) In general In the case of any partnership— (i) this subsection shall be applied at the partnership level and any deduction for business interest shall be taken into account in determining the non-separately stated taxable income or loss of the partnership, and (ii) the adjusted taxable income of each partner of such partnership— (I) shall be determined without regard to such partner’s distributive share of the non-separately stated taxable income or loss of such partnership, and (II) shall be increased by such partner’s distributive share of such partnership’s excess taxable income. For purposes of clause (ii)(II), a partner's distributive share of partnership excess taxable income shall be determined in the same manner as the partner's distributive share of nonseparately stated taxable income or loss of the partnership. (B) Special rules for carryforwards (i) In general The amount of any business interest not allowed as a deduction to a partnership for any taxable year by reason of paragraph (1) for any taxable year— (I) shall not be treated under paragraph (2) as business interest paid or accrued by the