If I already meet the 2% misc deduction floor on Sch-A, can I deduct investment expenses that I would otherwise list on Sch-E? Trying to avoid a Sch-E loss...

Forum|Forum|7 years ago
June 1, 2019
3 replies
11 views

It's my first year with a rental property, and it looks like I'll have a Schedule E loss that I'll need to carry over. Bummer.

However, I got the bright idea that since I already meet the Schedule A miscellaneous deduction 2% floor (thanks to wife's continuing ed classes + union dues), maybe I could just move some investment expenses to Schedule A?

This would effectively let me reduce my loss on Schedule E, while increasing my deduction on Schedule A. Is this allowed?

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null725

Level 13

No. That is called tax fraud and is not allowed.

data8504Author

Level 2

Hold on. I think I need a little more detail than that. Sch-A's "miscellaneous deductions" specifically allows investment expenses to be included. What is it about these expenses (which are, by definition since they're eligible on Sch-E, "investment") that makes them ineligible for inclusion on Schedule A? Clearly I *cannot* list the same expense on *both* schedules (double dip), but what rule prevents me from choosing one versus the other?