Form 4952 for Thornton Colorado 2024-2025

Form 4952 for Thornton Colorado: What You Should Know

How to Use 4952 Form 4952 is used to figure investment interest expense on some loans using Form 4951. 1. Fill out the form using instructions to calculate the amount of interest. 2. Include interest income (if any) earned under the loan on Line 8b of Form 4952. 3. If the interest expense is carried forward to a future tax year, include the tax-deductible amount of interest expense on Line 12a. 4. If the interest expense is not carried back to a future tax year, add the interest expense on Line 12a to the amount of investment interest expense on Form 4952. If you do not use a deduction for interest expense on the amount of investment interest expense, the amount of investment interest expense on Form 4952 will not be less than the interest expense shown on Form 4951, so you cannot use the interest expense as a deduction. 5. If you are not filing Form 4952, fill out Form 4695. Note : Only use the interest expense on Form 4695 to figure interest expense on Form 4952 if you have a deduction for investment interest expense on Form 4951. Include the interest expense on Line 32 of Form 4695. 6. If you have a return to file in which you were treated as the owner of the loan, you may be entitled to make interest deductions on all the proceeds of the loan, including interest on interest and/or principal on any advances to the borrower. Note : Interest on an advance cannot be carried over to a future year. How to Find Form 4952 When the IRS allows you to deduct the interest expense for a loan, you will see a line of code 4952, “Investment interest expense.” It is located under “Line 6, Items of Income, (Excluded from Gross Income).” You will see a box titled “Deductions” with a checkbox labeled “Yes.” If you check the box, you will be able to deduct up to 1,000 of the investment interest expense. This may be a higher amount than the amount you can deduct from personal income taxes. You need to figure the amount to deduct on your state income tax return and then use Form 4952 to figure the amount to deduct on your federal income tax return. The following table shows the applicable line in Form 4952 (Form 4952) that is used to calculate your investment interest expense deduction.

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