Form 4952 - Investment Interest Expense Deduction (Page 2 of 2) in pdf

Form 4952 (1991)

Page

If you have investment expenses

expenses reported to you on Schedule

that is not a passive activity. For

reported on a form or schedule other

K-1 from a partnership or an S

example, a working interest in an oil or

than Schedule A, include those

corporation. Also include net investment

gas property that is not a passive

expenses when figuring investment

income from an estate or a trust.

activity is property held for investment if

expenses for line 4.

you did not materially participate in the

Investment Income

activity.

Line 6—Investment Interest

Investment income includes income (not

Investment Expenses

Expense Deduction

derived in the ordinary course of a trade

or business) from interest, dividends,

Investment expenses are your allowed

This is the amount you may deduct as

annuities, royalties, and net gain from

deductions, other than interest expense,

investment interest expense.

the disposition of property held for

directly connected with the production

Individuals

investment (including capital gain

of investment income. For example,

distributions from mutual funds). Net

depreciation or depletion allowed on

Enter the amount from line 6 on line 11

income from the following passive

assets that produce investment income

of Schedule A (Form 1040), even if all or

activities is also treated as investment

is an investment expense.

part of it is attributable to a partnership

income:

Investment expenses do not include

or an S corporation. However, if any

Rental of substantially nondepreciable

any deductions taken into account in

portion of this amount is attributable to

property;

determining your income or loss from a

royalties, enter that portion of the

passive activity.

Equity-financed lending activities; and

interest expense on Schedule E (Form

If you have investment expenses that

Acquisition of certain interests in a

1040).

are included as a miscellaneous itemized

pass-through entity licensing intangible

deduction on line 20 of Schedule A

Estates and Trusts

property.

(Form 1040), you may not have to use all

See Temporary Regulations section

Enter the amount from line 6 on line 10

of the amount for purposes of line 4 of

1.469-2T(f)(10) for details.

of Form 1041.

Form 4952. The 2% adjusted gross

In addition to the activities listed

income limitation on Schedule A may

above, net passive income from a

Form 6198

reduce the amount.

passive activity of a publicly traded

To figure the amount to use, compare

partnership (as defined in section

If any portion of the deductible

the amount of the investment expenses

469(k)(2)) is also included in investment

investment interest expense is

included on line 20 of Schedule A with

income. See Notice 88-75, 1988-2 C.B.

attributable to an activity for which you

the total miscellaneous expenses on line

386, for details.

are not at risk, you must also use Form

24 of Schedule A. The smaller of the

6198, At-Risk Limitations, to figure your

Investment income does not include

investment expenses included on line 20

deductible investment interest expense.

Alaska Permanent Fund Dividends. See

or the total of line 24 is the amount to

Enter the portion attributable to the

Rev. Rul. 90-56, 1990-2 C.B. 102.

use to figure the investment expense for

at-risk activity on line 4 of Form 6198.

line 4.

Property Held for Investment

Reduce line 6 of Form 4952 by the

Example. Assume line 20 of Schedule

amount entered on Form 6198. See

Property held for investment includes

A includes investment expenses of

Form 6198 and its instructions for more

property that produces investment

$3,000, and line 24 is $1,300 after the

details, especially the instructions for

income. However, it does not include an

2% adjusted gross income limitation.

line 4 of that form.

interest in a passive activity. See

Investment expenses of $1,300 are used

Passive Activities, on page 1, for more

Alternative Minimum Tax

to figure the amount of investment

details.

expense for line 4. If investment

Deductible interest expense is an

Property held for investment also

expenses of $800 were included on line

adjustment for alternative minimum tax

includes an interest in an activity of

20 and line 24 was $1,300, investment

purposes. Get Form 6251, Alternative

conducting a trade or business in which

expenses of $800 would be used.

Minimum Tax—Individuals, or Form

you did not materially participate and

8656, Alternative Minimum Tax—

Fiduciaries.

Form 4952 - Investment Interest Expense Deduction Page 2

Related Articles

Related forms

Related Categories