Question
Why is partners basis being reduced by interest expense when not subject to 163(j)?
The partnership and it's partners are not subject to sec 163(j). The partners basis is being reduced on the basis worksheet by the interest expense in addition to being reduced by the loss which includes the interest expense.
The interest expense is entered on line 4b of the worksheet. Since there was a loss nothing there is nothing on line 4a for partnership income. Then since line 4a less 4b is less than zero, the interest it is added to line 10 which is the partnerships loss.
The result is a reduction of basis for the interest twice.
Does the program need updated or am I missing something?
