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smcguirecsmm
Level 1
September 30, 2020
Question

how to enter interest expense for acquiring an S corporation ownership interest

  • September 30, 2020
  • 2 replies
  • 32 views

My client incurred interest expense related to borrowing funds to purchase his S corporation interest. How do I enter it into Lacerte so that the interest is not limited by either the investment interest rules or basis in the s corporation?

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2 replies

IRonMaN
IRonMaN
Level 15
September 30, 2020

What kind of interest are you thinking it might be if it isn't investment interest?

Slava Ukraini!
PhoebeRoberts
PhoebeRobertsIntuit Community Champion
Intuit Community Champion
September 30, 2020

I enter it under Separately Stated Income and Deductions, as an Other nonpassive item. Use Ctrl+E, enter Interest Expense.

I also enter an other current-year increase in basis to offset the reduction that Lacerte will automatically calculate. You'd probably need a squirrelier workaround if your guy has no basis and distributions in excess of basis, to avoid the situation where less of the distribution was taxable and some of the interest was suspended.

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