Drake Tax - 4952 - Line 5
Article #: 11628
Last Updated: October 21, 2024
Line 5, Investment expense, on screen 4952 is an adjustment field that will alter amounts carrying from entries on screen DIV or INT for investment expenses. If Form 4952 is not produced as needed, check entries on screens DIV, INT, and Schedule A.
Form 4952, Investment Interest Expense Deduction, concerns both:
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Investment interest expense - Interest paid on money the taxpayer borrowed that is allocable to property held for investment. Enter the investment interest expense paid or accrued for that year on Schedule A, line 9. This amount is then carried to Form 4952 to figure the amount of the investment interest expense deduction allowed on the return.
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Investment expense - the taxpayer's allowed deductions, other than interest expense, directly connected with the production of investment income. This may be entered
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on line 23* of the A screen
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on line 5 of the DIV screen or of the INT screen, which flows to line 23* of Schedule A.
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Line 5 of the 4952 screen may be used to adjust the amount that carries to line 23* of the Schedule A from the Interest or Dividend screens. Do not duplicate entries made on forms DIV or INT.
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Note The allowable deduction is subject to the 2% limitation imposed by line 27* of Schedule A.
Form 4952 is not produced unless investment interest is entered on Form 4952, line 1. If the form is produced and there are investment expenses other than interest expenses, line 5 displays the smaller of the investment expenses included on Schedule A, line 23*, or the total on Schedule A, line 27*.
Form 4952 may be forced to print, even if it is not required, by going to the PRNT screen and checking the box "Print Form 4952." Form 4952 is not required if all three of the following apply:
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Investment income from interest and ordinary dividends minus any qualified dividends is more than that taxpayer's investment interest expense.
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The taxpayer does not have any other deductible investment expenses.
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The taxpayer does not have any carryover of disallowed investment interest expense from prior years.
Caution *Note: Starting in Drake18, the Tax Cuts and Jobs Act has disallowed most Schedule A miscellaneous deductions that are subject to the 2% floor on the federal level. The lines still exist on the data entry screens for states that did not conform with the federal change.
See the complete instructions with Form 4952 for additional information. For more details on deducting investment interest, see Publication 550, Investment Income and Expenses.