Where do I enter 1065 K-1 163 interest deduction

Forum|Forum|3 years ago
April 7, 2023
1 reply
11 views

I have a Form 1065 K-1 with an amount on Line 13 coded W. The instructions say "Interest Expense & Loan Cost Amortization attributable to refinance proceeds distributed subject to the tracing rules of Reg Sec 1.163-8T. How does this get input?

Lacerte Tax

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PhoebeRoberts

Intuit Community Champion

You use the tracing rules to figure out if and where it's deductible. Then make any entries that give you that result. The common answers are nondeductible expense and Schedule A investment interest, but it might be properly traceable to some other activity.

If you Google "interest on debt financed distributions" you'll probably get some plain English explanations.

J

JeffRAuthor

Level 2

Thank you PhoebeRoberts. It's interest on debt used to finance distributions to partners. According to the K-1 instructions, it should go on Schedule E, page 2, labeled with the partnership name and "interest expense." It's shown separately because it was traced in accordance with sec. 1.163.

sjrcpa

Level 15

You're misinterpreting what it says.

What did your client do with the distribution they received? The interest expense is traced to that.

The more I know the more I don’t know.

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