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johwa_77
New Member

I borrowed money to invest in 2 entities: a LLC where I am a material participant and an LLC where I am passive. How do I report the interest expense in turbo tax?

To be clear, I have two separate entities and two separate loans.
3 Replies
Anonymous
Not applicable

I borrowed money to invest in 2 entities: a LLC where I am a material participant and an LLC where I am passive. How do I report the interest expense in turbo tax?

 
Anonymous
Not applicable

I borrowed money to invest in 2 entities: a LLC where I am a material participant and an LLC where I am passive. How do I report the interest expense in turbo tax?

Rick19744
Level 11

I borrowed money to invest in 2 entities: a LLC where I am a material participant and an LLC where I am passive. How do I report the interest expense in turbo tax?

I don't agree with @Anonymous based on your facts.

Borrowing $$ to fund an interest in a business activity, is deductible based on the tracing rules.

See the attached instructions to Schedule E and in particular page E-10 line 28; debt financed acquisition.  Here you borrowed $$ to acquire an interest in a business.

For the activity in which you materially participate, the interest expense will be reported on Schedule E on a separate line titled "Business Interest".

For the passive activity, the interest expense will be included in the passive activity amount reported on form 8582.

https://www.irs.gov/pub/irs-pdf/i1040se.pdf

 

*A reminder that posts in a forum such as this do not constitute tax advice.*
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