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dkh
Level 15
March 29, 2024
Solved

Interest paid on Line of Credit funds used by someone other than my client

  • March 29, 2024
  • 2 replies
  • 20 views

Client withdrew money from their Line of Credit to lend to someone.  This someone paid interest to the client and issued them a 1099-INT.  

 I do not know what to do with the interest the client paid on their LOC.   

I think it is not deductible. Client has interest income to report but cannot take the interest expense. 

 

 

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Best answer by IRonMaN

Investment interest?

2 replies

IRonMaN
IRonMaNAnswer
Level 15
March 29, 2024

Investment interest?

Slava Ukraini!
dkh
dkhAuthor
Level 15
March 29, 2024

F4952.... of course !!     Which means it's useless because client can't itemize.

Thank you @IRonMaN .              

IRonMaN
Level 15
March 29, 2024

You betcha!

Slava Ukraini!
BobKamman
Level 15
March 29, 2024

But of course, relying on your advice the client is charging a higher interest rate than what is being paid, to make up for the tax owed. 

Right?

dkh
dkhAuthor
Level 15
March 30, 2024

@BobKamman     "relying on your advice"    Hahahahaha  I don't have those kind of clients.  Mine like to show up with surprises.    However, the client is charging 2% more than they're paying.  Not sure I agree with lending to your employer, other than it maybe helps with job security.