Borrowing Money to Buy Stock

[Rocko1234]

I borrowed money to buy stock. I sold some of it and paid back the loan + interest for the shares I sold. The amount I received from the sale had already deducted the interest + principal. No 1099B. 

I entered the sale details into "Stocks, Mutual Funds, Bonds, Other" section. When I get to "Select any less common adjustments that apply", do I check the box "The reported sales price did not deduct all fees or selling expenses" enter the loan and interest details that offset what I received vs total sale proceeds?  

I entered the interest in the " Investment Interest Expense" section but confused if I need to also check the box in "Stocks, Mutual Funds..." section and re-enter the loan + interest. Please help. 

[ColeenD3 · Accepted solution]

Do not adjust the basis of the stock. Take the expense on Form 4952.

If you borrow money to purchase an investment, you may qualify for a tax break. The IRS allows certain taxpayers to take a tax deduction for the interest expense on some loans using Form 4952. However, the tax ramifications of investment interest can be complicated, as the IRS only allows a deduction for certain types of investment interest.

To enter/edit Form 4952 (Investment Interest Expense Deduction):

1. Open your return (or continue if open).

2. Type “4952” (upper-case works too) in the Search box (upper right-hand corner of the screen)

3. Click on “Jump to 4952” link.

4. Answer screen interview prompts.

Form 4952