IRS Form 4952 2017 Investment Interest Expense Deduction

IRS Form 4952, "Investment Interest Expense Deduction" is a tax form issued by the United States Internal Revenue Service. The latest version of the form was released in January 1, 2017. A up-to-date fillable 4952 Form in PDF is available for download below.

The "Investment Interest Expense Deduction" can be filed digitally and submitted online or printed out and sent to the IRS mailing address.

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4952
OMB No. 1545-0191
Investment Interest Expense Deduction
2017
Form
Go to www.irs.gov/Form4952 for the latest information.
Department of the Treasury
Attachment
Attach to your tax return.
51
Sequence No.
Internal Revenue Service (99)
Name(s) shown on return
Identifying number
Part I
Total Investment Interest Expense
1
1
Investment interest expense paid or accrued in 2017 (see instructions)
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2
Disallowed investment interest expense from 2016 Form 4952, line 7 .
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2
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Total investment interest expense. Add lines 1 and 2 .
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Part II
Net Investment Income
4 a Gross income from property held for investment (excluding any net
4a
gain from the disposition of property held for investment) .
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b Qualified dividends included on line 4a .
4b
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c Subtract line 4b from line 4a
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4c
d Net gain from the disposition of property held for investment .
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4d
e Enter the smaller of line 4d or your net capital gain from the
disposition of property held for investment (see instructions) .
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4e
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Subtract line 4e from line 4d
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4f
g Enter the amount from lines 4b and 4e that you elect to include in investment income (see
instructions) .
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4g
h Investment income. Add lines 4c, 4f, and 4g
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4h
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Investment expenses (see instructions) .
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6
Net investment income. Subtract line 5 from line 4h. If zero or less, enter -0- .
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6
Part III
Investment Interest Expense Deduction
7
Disallowed investment interest expense to be carried forward to 2018. Subtract line 6 from
line 3. If zero or less, enter -0- .
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Investment interest expense deduction. Enter the smaller of line 3 or 6. See instructions .
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4952
For Paperwork Reduction Act Notice, see page 4.
Form
(2017)
Cat. No. 13177Y
4952
OMB No. 1545-0191
Investment Interest Expense Deduction
2017
Form
Go to www.irs.gov/Form4952 for the latest information.
Department of the Treasury
Attachment
Attach to your tax return.
51
Sequence No.
Internal Revenue Service (99)
Name(s) shown on return
Identifying number
Part I
Total Investment Interest Expense
1
1
Investment interest expense paid or accrued in 2017 (see instructions)
.
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.
.
.
.
.
.
2
Disallowed investment interest expense from 2016 Form 4952, line 7 .
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2
3
Total investment interest expense. Add lines 1 and 2 .
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3
Part II
Net Investment Income
4 a Gross income from property held for investment (excluding any net
4a
gain from the disposition of property held for investment) .
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b Qualified dividends included on line 4a .
4b
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c Subtract line 4b from line 4a
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4c
d Net gain from the disposition of property held for investment .
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4d
e Enter the smaller of line 4d or your net capital gain from the
disposition of property held for investment (see instructions) .
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4e
f
Subtract line 4e from line 4d
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4f
g Enter the amount from lines 4b and 4e that you elect to include in investment income (see
instructions) .
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4g
h Investment income. Add lines 4c, 4f, and 4g
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4h
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Investment expenses (see instructions) .
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6
Net investment income. Subtract line 5 from line 4h. If zero or less, enter -0- .
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6
Part III
Investment Interest Expense Deduction
7
Disallowed investment interest expense to be carried forward to 2018. Subtract line 6 from
line 3. If zero or less, enter -0- .
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7
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Investment interest expense deduction. Enter the smaller of line 3 or 6. See instructions .
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4952
For Paperwork Reduction Act Notice, see page 4.
Form
(2017)
Cat. No. 13177Y
THIS PAGE INTENTIONALLY LEFT BLANK
3
Form 4952 (2017)
Page
Section references are to the Internal Revenue Code unless otherwise
Exception. A working interest in an oil or gas property that you held
noted.
directly or through an entity that didn't limit your liability is property held
for investment, but only if you didn't materially participate in the activity.
Future Developments
Part II—Net Investment Income
For the latest information about developments related to Form 4952 and
its instructions, such as legislation enacted after they were published,
Line 4a
go to www.irs.gov/Form4952.
Gross income from property held for investment includes income,
unless derived in the ordinary course of a trade or business, from
General Instructions
interest, ordinary dividends (except Alaska Permanent Fund dividends),
annuities, and royalties. Include investment income reported to you on
Purpose of Form
Schedule K-1 from a partnership or an S corporation. Also include net
Use Form 4952 to figure the amount of investment interest expense you
investment income from an estate or a trust.
can deduct for 2017 and the amount you can carry forward to future
Also include on line 4a (or 4d, if applicable) net passive income from a
years. Your investment interest expense deduction is limited to your net
passive activity of a publicly traded partnership (as defined in section
investment income.
469(k)(2)). See Regulations sections 1.469-10 and 1.7704-1 (including
For more information, see Pub. 550, Investment Income and
the transition rule of section 1.7704-1(l)), for details.
Expenses.
Net income from certain passive activities, such as rental of
Who Must File
substantially nondepreciable property, may have to be recharacterized
and included on line 4a. For details, see Pub. 925, Passive Activity and
If you are an individual, estate, or a trust, you must file Form 4952 to
At-Risk Rules, or Regulations section 1.469-2(f)(10).
claim a deduction for your investment interest expense.
If you are filing Form 8814, Parents’ Election To Report Child’s
Exception. You don't have to file Form 4952 if all of the following apply.
Interest and Dividends, part or all of your child’s income may be
• Your investment income from interest and ordinary dividends minus
included on line 4a. See the instructions for Form 8814 for details.
any qualified dividends is more than your investment interest expense.
Don't include on line 4a any net gain from the disposition of
• You don't have any other deductible investment expenses.
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property held for investment. Instead, enter it on line 4d.
• You don't have any carryover of disallowed investment interest
expense from 2016.
CAUTION
Allocation of Interest Expense
Line 4b
If you paid or accrued interest on a loan and used the loan proceeds for
Enter the portion of ordinary dividends included on line 4a that are
more than one purpose, you may have to allocate the interest. This is
necessary because different rules apply to investment interest, personal
qualified dividends. For the definition of qualified dividends, see the
instructions for Form 1040, line 9b (or Form 1041, line 2b).
interest, trade or business interest, home mortgage interest, and passive
activity interest. See Pub. 535, Business Expenses.
Line 4d
Specific Instructions
Net gain from the disposition of property held for investment is the
excess, if any, of your total gains over your total losses from the
Part I—Total Investment Interest Expense
disposition of property held for investment. When figuring this amount,
include capital gain distributions from mutual funds and capital loss
Line 1
carryovers.
Enter the investment interest expense paid or accrued during the tax
Line 4e
year, regardless of when you incurred the indebtedness. Investment
Net capital gain from the disposition of property held for investment is
interest expense is interest paid or accrued on a loan or part of a loan
the excess, if any, of your net long-term capital gain over your net short-
that is allocable to property held for investment (as defined later).
term capital loss from the disposition of property held for investment.
Include investment interest expense reported to you on Schedule K-1
Capital gain distributions from mutual funds are treated as long-term
from a partnership or an S corporation. Include amortization of bond
capital gains.
premium on taxable bonds purchased after October 22, 1986, but
before January 1, 1988, unless you elected to offset amortizable bond
Note: If line 4e is more than zero and you enter an amount on line 4g,
premium against the interest payments on the bond. A taxable bond is a
see the Note in the line 4g instructions.
bond on which the interest is includible in gross income.
Line 4g
Investment interest expense doesn't include any of the following.
In general, qualified dividends and net capital gain from the disposition
• Home mortgage interest.
of property held for investment are excluded from investment income.
• Interest expense that is properly allocable to a passive activity.
But you can elect to include part or all of these amounts in investment
Generally, a passive activity is any trade or business activity in which
income.
you don't materially participate and any rental activity. See the
The qualified dividends and net capital gain that you elect to
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Instructions for Form 8582, Passive Activity Loss Limitations, for details.
include in investment income on line 4g aren't eligible to be
• Any interest expense that is capitalized, such as construction interest
taxed at the qualified dividends or capital gains tax rates. You
subject to section 263A.
should consider the tax effect of using the qualified dividends
CAUTION
• Interest expense related to tax-exempt interest income under
and capital gains tax rates before making this election. Once made, the
section 265.
election can be revoked only with IRS consent.
• Interest expense, disallowed under section 264, on indebtedness with
To make the election, enter on line 4g the amount you elect to include
respect to life insurance, endowment, or annuity contracts issued after
in investment income (don't enter more than the sum of lines 4b and 4e).
June 8, 1997, even if the proceeds were used to purchase any property
Also enter this amount on whichever of the following applies.
held for investment.
• The Qualified Dividends and Capital Gain Tax Worksheet, line 5, in the
Property held for investment. Property held for investment includes
Instructions for Form 1040.
property that produces income, not derived in the ordinary course of a
• The Schedule D Tax Worksheet, line 3.
trade or business, from interest, dividends, annuities, or royalties. It also
• Schedule D (Form 1041), line 25.
includes property that produces gain or loss, not derived in the ordinary
• The Qualified Dividends Tax Worksheet, line 3, in the Instructions for
course of a trade or business, from the disposition of property that
Form 1041.
produces these types of income or is held for investment. However, it
doesn't include an interest in a passive activity.
4
Form 4952 (2017)
Page
Don't reduce the amount of qualified dividends on Form 1040, line 9b
to royalties, enter that part on Schedule E (Form 1040). Also, if any part
(or Form 1041, line 2b(2)), by any part of the amount on line 4g.
of the interest is attributable to a trade or business that isn't a passive
activity, enter that part on the schedule where you report other
Note: The amount on line 4g is generally treated as being attributable
expenses for that trade or business.
first to net capital gain from property held for investment (line 4e), and
Estates and trusts. Enter the amount from line 8 (excluding any amount
then to qualified dividends (line 4b). This treatment results in the least
included on Form 6198, line 4—see below) on Form 1041, line 10.
tax being figured for Form 1040, line 44 (or Form 1041, Schedule G, line
However, if any part of the interest is attributable to a trade or business
1a). However, you can treat less of the amount on line 4e as attributable
that isn't a passive activity, enter that part on the schedule where you
to line 4g and more to line 4b. You may want to do this if you are filing
report other expenses for that trade or business.
Form 1116, Foreign Tax Credit, as your tax after credits may be lower in
Form 6198. If any of your deductible investment interest expense is
certain cases. To do so, enter on the dotted line next to line 4e “Elec.”
attributable to an activity for which you aren't at risk, you must also use
and the part of line 4e that you elect to treat as being attributable to line
Form 6198, At-Risk Limitations, to figure your deductible investment
4g (don't enter less than the excess of line 4g over line 4b). You will use
interest expense. Include the part attributable to the at-risk activity on
this smaller amount instead of the amount on line 4e when figuring your
Form 6198, line 4.
tax.
Alternative minimum tax (AMT). Deductible interest expense may be
an adjustment for the AMT. For details, see Form 6251, Alternative
Generally, you must make this election on a timely filed return,
Minimum Tax—Individuals, or Schedule I (Form 1041).
including extensions. However, if you timely filed your return without
making the election, you can make the election on an amended return
Paperwork Reduction Act Notice. We ask for the information on this
filed within 6 months of the due date of your return (excluding
form to carry out the Internal Revenue laws of the United States. You
extensions). Write “Filed pursuant to section 301.9100-2” on the
are required to give us the information. We need it to ensure that you are
amended return and file it at the same place you filed the original return.
complying with these laws and to allow us to figure and collect the right
Line 5
amount of tax.
Investment expenses are your allowed deductions, other than interest
You aren't required to provide the information requested on a form
expense, directly connected with the production of investment income.
that is subject to the Paperwork Reduction Act unless the form displays
For example, depreciation or depletion allowed on assets that produce
a valid OMB control number. Books or records relating to a form or its
investment income is an investment expense.
instructions must be retained as long as their contents may become
material in the administration of any Internal Revenue law. Generally, tax
Include investment expenses reported to you on Schedule K-1 from a
partnership or an S corporation.
returns and return information are confidential, as required by section
6103.
Investment expenses don't include any deductions used in
The time needed to complete and file this form will vary depending on
determining your income or loss from a passive activity.
individual circumstances. The estimated burden for individual taxpayers
If you have investment expenses that are included as a miscellaneous
filing this form is approved under OMB control number 1545-0074 and
itemized deduction on Schedule A (Form 1040), line 23, the 2% adjusted
is included in the estimates shown in the instructions for their individual
gross income limitation on Schedule A (Form 1040), line 26, may reduce
income tax return. The estimated burden for all other taxpayers who file
the amount you must include on Form 4952, line 5. Include on line 5 the
this form is: Recordkeeping, 39 min.; Learning about the law or the
smaller of: (a) the investment expenses included on Schedule A (Form
form, 12 min.; Preparing the form, 24 min.; and Copying,
1040), line 23; or (b) the total on Schedule A (Form 1040), line 27.
assembling, and sending the form to the IRS, 13 min.
Part III—Investment Interest Expense Deduction
If you have comments concerning the accuracy of these time
estimates or suggestions for making this form simpler, we would be
Line 8
happy to hear from you. See the instructions for the tax return with
Individuals. Generally, enter the amount from line 8 (excluding any
which this form is filed.
amount included on Form 6198, line 4—later) on Schedule A (Form
1040), line 14, even if all or part of it is attributable to a partnership or an
S corporation. However, if any part of the interest expense is attributable

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