Catherine Posted April 4, 2022 Report Share Posted April 4, 2022 This item came through as a Box 20 Code "N" item on the K-1. I have no idea what to do with "excess investment interest." Can anyone point me in the right direction? Form 49-whatever for investment interest? Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted April 5, 2022 Report Share Posted April 5, 2022 Look at the 8990. The K-1 Entity had Excess Business Interest Expense and were limited. The partner needs to fill the 8990. I am not sure exactly how to make it flow through to the partner, but I will be working on this as well today. Time to pull out the books and see what I can find. Tom Longview, TX 1 Quote Link to comment Share on other sites More sharing options...
Catherine Posted April 5, 2022 Author Report Share Posted April 5, 2022 Thanks, @BulldogTom and I'll look at the 8990 when I get back to this client later today. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted April 6, 2022 Report Share Posted April 6, 2022 On 4/5/2022 at 10:01 AM, Catherine said: Thanks, @BulldogTom and I'll look at the 8990 when I get back to this client later today. Did you figure it out @Catherine? I read the instructions for the form and my head started swimming. I think I understand the concept (if a business has a loss that was driven by a lot of interest, the deduction on the interest will be limited) but not the application to a partner. The K-1 Box 1 has a loss of 6,800 and Box 20 Code N statement has 3,000 of Business Interest Expense and 14,000 of Adjusted Taxable Income. I think you start by filling in Schedule A on page 3 of the form, putting 3K in column C and 14K in column F. The 3K then transfer to page 1, Section I, line 3 and 14K transfers to Section II, line 14. And when I get that done, I show on page 2 that I have a 3K allowable deduction that I have no idea where to put on the 1040. Did you do better than I did? Tom Longview, tX Quote Link to comment Share on other sites More sharing options...
Catherine Posted April 9, 2022 Author Report Share Posted April 9, 2022 Hi @BulldogTomno I didn't figure it out. Got derailed by other problem clients and never got back to this one! The guy's in France until Monday so I tabled it. Looks from what you wrote that I need to pull that one out (tomorrow; too fried tonight) and see if I can make heads or tails of it on a second go-round. I'll report back, either way. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted April 9, 2022 Report Share Posted April 9, 2022 On 4/4/2022 at 5:07 PM, Catherine said: This item came through as a Box 20 Code "N" item on the K-1. I have no idea what to do with "excess investment interest." Can anyone point me in the right direction? Form 49-whatever for investment interest? The allowable interest is already deducted and has been factored in to any income or loss reported on the K-1. The amount in box 20 with code N is for adjusting the partner's basis. Here's the linked K-1 instructions where code N is shown below. You may also want to read the instructions in the section for the basis adjustment worksheet and the section pertaining to partner's limitation on losses and deductions. I think your entry from box 20, code N goes on line 10 of that worksheet. I think what Tom is referring to that causes need for Form 8990 is if there is an entry on line 13 having code K where the interest expense must be adjusted at the partner level. Sorry, I've not had to do this yet. 1 1 Quote Link to comment Share on other sites More sharing options...
Catherine Posted April 13, 2022 Author Report Share Posted April 13, 2022 Thank you, @jklcpa! I just this afternoon found that it was a basis adjustment item - on the IRS instructions - and was going to post it here myself. But I'm going to save your version to the client's file, because you blew it up big enough to read without squinting. 2 Quote Link to comment Share on other sites More sharing options...
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