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Do Box 11A losses iffset Net Investment Income on Form 4952

karenrae
Level 1

A K-1 from an investor partnership reports foregn exchange losses (sect. 988) in Box 11A. They are being reported as "other income (loss)" on the taxpayer's 1040. How should they be treated, if at all, on form 4952 for the net investment interest expense deduction?

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sjrcpa
Level 15

Since it is investment income/loss for NIIT I think it is investment income/loss for investment interest limit computations, too.


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sjrcpa
Level 15

Maybe. Is the rest of the income/loss on the K-1 portfolio?

Or is it trade or business?


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karenrae
Level 1

It's a investment fund LP. Yes, the rest of the income is interest and capital gains. The 11A amount is related to foreign currency exchange losses. 

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sjrcpa
Level 15

But are the interest and capital gains investment income or trade or business income?

If it's a hedge fund they are probably business income-disclosed in the fine print attachments. Could be subject to NIIT. 


ex-AllStar
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karenrae
Level 1

Yes, they are subject to the NIIT--the notes say so. However I was asking about the net interest expense limitation on form 4952 not the NIIT.  Are the FOREX losses taken against net investment incomes?

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sjrcpa
Level 15

Since it is investment income/loss for NIIT I think it is investment income/loss for investment interest limit computations, too.


ex-AllStar

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