Investment interest expense on form 4952 reduced without reducing tax

Forum|Forum|6 years ago
February 29, 2020
1 reply
9 views

Here are my facts:

I have investment income $100
I have carryover investment interest expense $1000 shown in form 4952
I have no new investment interest expense
I used standard deduction

Using proconnect tax online, $100 will be subtracted on form 4952 leaving $900 to be carried over to next year, but I receive zero tax benefit. Is this required by law or a software issue? Can I prevent the subtraction?

PS: As a comparison, accumulated capital loss only gets reduced if there is a benefit.

ProConnect Tax Online

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qbteachmt

Level 15

"but I receive zero tax benefit"

You see that $100 is offset; that's the benefit. The rest will carry forward.

"As a comparison, accumulated capital loss only gets reduced if there is a benefit"

Certain amounts are considered Refundable = you get the actual money back.

Certain amounts are considered Creditable = they get applied to something, when there is that something as an Activity.

What you describe is, you didn't have to report the $100 Gross, because the credit offset it to Net $0. And now there is only $900 credit remaining. It's right here:

"$100 will be subtracted on form 4952 leaving $900 to be carried over"

Don't yell at us; we're volunteers

puravidaptoAuthor

Level 7

@qbteachmt I only get $100 offset when I itemized. What happens is $100 is taken from the available accumulated invest interest expense, and then added to schedule A regardless whether I use itemized deduction or not. Could you please try it and you will see what I meant. Thanks.

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