Form 4952 line 1 and line 5 and line 8

Forum|Forum|2 years ago
April 14, 2024
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I received K1 form, the number in box 13H is $2127, and in box 20B is $20812. I entered 2127 in TT in "Investment Interest Expense" and 20812 in "Investment Expense". Now, my form 4952 is showing:

Line 1: 3742

Line 3: 3742

Line 5: 20812

Line 8: 3742

My first question is why line 1 is showing 3742? Where does the number 3742 come from? The second question is why line 8 does not allow me to deduct the total expense 22939 (2127+20812)?

Thank you for your help.

TurboTax Home & Biz Windows

Best answer by PatriciaV

The amount on Form 4952 Line 1 comes from:

Schedule K-1 Partnerships Worksheet Line 13 Code H and/or
Schedule K-1 S Corporations Worksheet Line 12 Code H and/or
Schedule K-1 Partnerships Worksheet Line 13 Code ZZ where the Additional Information Worksheet Line 13 reports the amount on Line 7 as investment interest expense to be reported on Schedule E, page 2.

Line 5 is the total of investment expenses other than interest. These expenses reduce the investment income available for the investment interest deduction.

Your total deduction on Line 8 is limited to the smaller of Line 3 (investment interest expense) or Line 6 (net investment income). In other words, if you have more income than expense, you may deduct your total expense.

You can see the underlying calculations on the Form 4952 Worksheet (Wks) using Forms Mode (F6 or Forms>>>Open Form...).

PatriciaVAnswer

Employee

The amount on Form 4952 Line 1 comes from:

Schedule K-1 Partnerships Worksheet Line 13 Code H and/or
Schedule K-1 S Corporations Worksheet Line 12 Code H and/or
Schedule K-1 Partnerships Worksheet Line 13 Code ZZ where the Additional Information Worksheet Line 13 reports the amount on Line 7 as investment interest expense to be reported on Schedule E, page 2.

Line 5 is the total of investment expenses other than interest. These expenses reduce the investment income available for the investment interest deduction.