Hi VenuR.  I took your question to mean, exactly HOW IN LACERTE to report and deduct your partner's interest expense on her debt financed partnership capital contribution.

We have the (almost) exact situation.  My client, the Son, bought his Mothers shares in her SCorp.  Mom was the 100% owner.  Son signed a note payable to Mom and became the new 100% owner.

For Lacerte, we record the Son's SCorp K-1 as usual.  Then we record a second K-1 for that same SCorp (duplicating the same name, fein, etc) - and for the 2nd K-1 we enter the debt financed interest paid by the Son to the Mother as negative amount in "Ordinary business income (loss)".  We footnote that the second K-1 is the Debt Financed acquisition interest.

We have followed this procedure for years now and have no issues to date with the IRS.