I am making payments on a loan (principal and interest) where and how do I deduct?

[MichaelMc]

Principal repayment of a loan is never tax-deductible.

Business interest expense is an amount charged for the use of money you borrowed for business activities.

You can generally deduct as a business ex­pense all interest you pay [or accrue, if you use the accrual method of accounting] during the tax year on debts related to your trade or busi­ness. Interest relates to your trade or business if you use the proceeds of the loan for a trade or business expense. It does not matter what type of property secures the loan. You can deduct interest on a debt only if you meet all the following requirements.

• You are legally liable for that debt. 
• Both you and the lender intend that the debt be repaid.
• You and the lender have a true debtor­-creditor relationship. 

If you are self-employed and file Schedule C to report your business activities, non-mortgage business interest is reported in Part II, Line 16b.

For more information, please see IRS Pub. 535 Business Expenses, Chapter 4.