The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: Interest paid to broker on margin loan Date:  5/9/2021  10:52 PM
Author:  Wradical Number:  132659 of 133243

I have another question on Form 4952. What do I input on Line 5? Instructions say:

"Investment expenses are your allowed deductions, other than interest expense, directly connected with the production of investment income. For example, depreciation or depletion allowed on assets that produce investment income is an investment expense."

If I have only stocks and shares including an MLP (EPD - Form 1065) do I have any such Investment Expenses? If I input zero I may be overestimating Net Investment Income (Line 6) but so long it is much larger than Interest Expense (Line 3) should it not be okay?

Zero is probably right, for a combination of reasons. That quoted section is not particularly useful. EPD is Enterprise Products Partners, a pipeline company. The income (or losses) it reports to you as a partner on your K-1 is mostly business income, subject to the (publicly traded partnership-PTP) passive loss limits, as opposed to investment income for this purpose. But you have to look at your K-1 for amounts classified as investment income and investment expenses to which Form 4952 applies.

Any other expenses you have related to your other investments are *probably* miscellaneous itemized deductions, which are not deductible for the next few years.

Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us