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deduct loan interest paid to purchase a partnership interest

John Arena
Level 1

My individual client took out a personal loan to purchase a partnership interest.  Is the loan interest deductible to him in any way on his 1040?

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Accountant-Man
Level 11

Is he a working doctor in the practice? If yes, then UPE.

If no, then F4952

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12 Replies 12
abctax55
Level 15

UPE on Sch E, page 2.  Separate line item is *my* preference.

Former Chump..umm... AllStar...This message was typed from 6 feet away so you can safely read it immediately.

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John Arena
Level 1

Thanks!

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PATAX
Level 11

@John Arena tomorrow when they ask you to accept a response as a solution make sure you give abc credit for that... Many accountants have never seen that...

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Accountant-Man
Level 11

Is he A) a managing partner of the business or B) is it merely an investment interest?

A) UPE like was said;

B) Investment interest on Schedule A after F4952.

** I'm still a champion... of the world! Even without The Lounge.
John Arena
Level 1

Not a managing partner, just a limited partner (LLC member).

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Accountant-Man
Level 11

So he borrowed money for an investment. F4952.

** I'm still a champion... of the world! Even without The Lounge.
John Arena
Level 1

Yes, he took out a personal bank loan to buy into a medical practice, which is an LLC taxed as a partnership.  Would that loan and the related interest expense still considered to be investment?

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Accountant-Man
Level 11

Is he a working doctor in the practice? If yes, then UPE.

If no, then F4952

** I'm still a champion... of the world! Even without The Lounge.

View solution in original post

qbteachmt
Level 15

Perhaps it needs to be clarified: "F4952"

Means "put it on Form 4952."

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Accountant-Man
Level 11

B) Investment interest on Schedule A after Form 4952.

** I'm still a champion... of the world! Even without The Lounge.
John Arena
Level 1

He is, thanks for the help.

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Accountant-Man
Level 11

accountant-man cartoon 072021.jpg

** I'm still a champion... of the world! Even without The Lounge.
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