From my K-1 report I have Investment Interest Expe...
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
pjones-tr
New Member

From my K-1 report I have Investment Interest Expense shown on line 13 code "W" should I put that amount in the box for Reported on Schedule "E" page 2?

 
3 Replies
KarenM90
Employee Tax Expert

From my K-1 report I have Investment Interest Expense shown on line 13 code "W" should I put that amount in the box for Reported on Schedule "E" page 2?

It depends on the nature of the business that this investment interest applied as to how that question is answered.

 

If you are trying to enter that on your 1040, when you go into the Income & Expense heading, scroll down to S-Corps, Partnerships and Trusts

Choose Start next to K-1

Just follow the onscreen prompts and answer the questions related to active participation, etc.  When you get to Box 13, enter the appropriate code (W)  and amount, this will record the interest correctly and TurboTax will determine if it is deductible based on your prior answers.  

 

The descriptions of how each of these codes from Box 13 is below, just FYI:  

 

Code W. Other deductions.

 

Amounts with this code may include the following.

  • Itemized deductions that Form 1040 or 1040-SR filers report on Schedule A (Form 1040 or 1040-SR).

  • Soil and water conservation expenditures and endangered species recovery expenditures. See section 175 for limitations on the amount you are allowed to deduct.

  • Expenditures for the removal of architectural and transportation barriers to the elderly and disabled that the partnership elected to treat as a current expense. The deductions are limited by section 190(c) to $15,000 per year from all sources.

  • Interest expense allocated to debt-financed distributions. The manner in which you report such interest expense depends on your use of the distributed debt proceeds. If the proceeds were used in a trade or business activity, report the interest on line 28 of Schedule E (Form 1040 or 1040-SR). In column (a), enter the name of the partnership and "interest expense." If you materially participated in the trade or business activity, enter the interest expense in column (i). If you didn't materially participate in the activity, follow the Instructions for Form 8582 to figure the interest expense you can report in column (g). See the definition of material participation, earlier. If the proceeds were used in an investment activity, report the interest on Form 4952. If the proceeds are used for personal purposes, the interest is generally not deductible.

  • Interest paid or accrued on debt properly allocable to your share of a working interest in any oil or gas property (if your liability isn't limited). If you didn't materially participate in the oil or gas activity, this interest is investment interest reportable as described earlier under Code H. Investment interest expense; otherwise, it is trade or business interest. If you didn't materially participate in the oil or gas activity, this interest is investment interest expense and should be reported on Form 4952. If you materially participated in the activity, report the interest on line 28 of Schedule E (Form 1040 or 1040-SR). On a separate line, enter "interest expense" and the name of the partnership in column (a) and the amount in column (i).

  • Contributions to a capital construction fund (CCF). The deduction for a CCF investment isn't taken on Schedule E (Form 1040 or 1040-SR). Instead, you subtract the deduction from the amount that would normally be entered as taxable income on line 11b of Form 1040 or 1040-SR. In the margin to the left of line 11b, enter "CCF" and the amount of the deduction.

  • Penalty on early withdrawal of savings. Report this amount on line 17 of Schedule 1 (Form 1040 or 1040-SR).

  • Film, television, and live theatrical production expenses. The partnership will provide a statement that describes the film, television, or live theatrical production generating these expenses. Generally, if the aggregate cost of the production exceeds $15 million, you are not entitled to the deduction. The limitation is $20 million for productions in certain areas (see section 181 for details). If you didn't materially participate in the activity, use Form 8582 to determine the amount that can be reported on Schedule E (Form 1040 or 1040-SR), line 28, column (g). If you materially participated in the production activity, report the deduction on Schedule E (Form 1040 or 1040-SR), line 28, column (i).

  • Domestic productions activities deduction (DPAD). The DPAD has been repealed for tax years beginning after 2017. However, if your tax year begins after 2017, the DPAD can be taken in limited circumstances. See Form 8903 and its instructions for details. If you qualify for the DPAD, the partnership will provide you with a statement with information that you can use to figure the DPAD. Report the qualified production activities income (QPAI) reported to you by the partnership in the applicable column of Form 8903, line 7. Report the portion of Form W-2 wages reported to you by the partnership on line 17 of Form 8903.

  • Deductions—portfolio (formerly deductible by individuals under section 67 subject to 2% AGI floor). For taxpayers other than individuals, deduct amounts that are clearly and directly allocable to portfolio income (other than investment interest expense and section 212 expenses from a REMIC).

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
daehreppans
Level 1

From my K-1 report I have Investment Interest Expense shown on line 13 code "W" should I put that amount in the box for Reported on Schedule "E" page 2?

I have followed through the K-1 entry steps.  The income reported was all in Box 5 for Investment Interest Income, and for box 13 it is Code H for Investment Interest Expense.  However, TurboTax is not deducting the Investment Expense.  Any idea why this may not be getting deducted so that the tax due is only on the net income (difference between Investment income and investment expense)?  I am materially participating in this business and there is no income in Box 1.

Anonymous
Not applicable

From my K-1 report I have Investment Interest Expense shown on line 13 code "W" should I put that amount in the box for Reported on Schedule "E" page 2?

you are inconsistent one place you say 13H the other 13W. 13W should work and flow to schedule E. However I would say if the only income reported was on line 5 - interest income - then the interest expense should be code H. 

 

for 13H investment interest expense flows to form 4952 which calculates the allowable deduction. the allowable amount flow to schedule A-line 9.    so you must have enough net investment income and also itemize your deductions to benefit from this expense.  people who don't itemize lose out because the investment income remains fully taxable while they get no deduction for the IIE.   

Dynamic AdsDynamic Ads
v
Privacy Settings