Is Interest on forgivable loan, that is used for investment, tax deductible?

[user314]

My employer paid me a bonus structured as a 10 year forgivable loan.  I am a W-2 employee.  I have invested the loan/bonus into the stock market.  Is the interest on the loan tax deductible under IRS publication 550 “investment interest and expenses”?  If so, how much of that interest can I deduct and where in TurboTax would I enter it?  Thank you.

[macuser_22]

If you are paying interest on a loan used for investment income then it might be deductible if you can itemized deductions (your total itemized deductions are more then the standard deduction.)

You can search topics for " investment interest expense" which will produce a 4952 form and put the allowable deduction on Schedule A line 9.

Only if all itemized deductions exceed the standard deduction will it be of benefit.

2020 standard deductions

$12,400 Single
$18,650 Head of Household
$24,800 Married Jointly

Add an additional $1,300 for over age 65 or blind
This amount increases to $1,650 if the taxpayer is also unmarried.

[Mike9241]

the interest would be reported as investment interest expense on form 4952.  investment interest expense is only deductible to the extent of investment income - excess of net short-term capital gains over net long-term capital losses, taxable interest income, net royalty (schedule E) income and non-qualified dividends. you can make an election to include qualified dividends and net long-term capital gains. doing so in effect recharacterizes those items as non-qualified dividends.   any excess investment interest may be carried forward.

TT automatically calculates the deductible amount and through manual input allows you to use L-T capital gains and qualified dividends 

[user314]

Got it, thank you.  I already itemize so I think I'll give this a go.

[user314]

Thank you for the detailed reply.  I appreciate it.