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.
The amount on Form 4952 Line 1 comes from:
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...).
The amount on Form 4952 Line 1 comes from:
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...).