Is there a way to deduct the interest I pay on a wrapped mortgage?

[johnwinston12]

On an installment sale the interest I receive is reported on a Sch B, but where do I deduct the interest that I pay on the underlying mortgage?

[johnwinston12]

This was on a rental property that was sold many years ago. In the past the interest on the wrapped mortgage was deducted from the interest received on the installment payments. The net interest is what was being reported on Sch B. I am trying to correct the prior problems and report it correctly. Does it have to go to 4952 and ultimately end up on Sch A or should it ultimately end up on some other form? They won't qualify to file Sch A and it will increase their income by a few thousand dollars if it has to be reported there. Please advise.

[sjrcpa]

The net to Sch B approach was wrong. i know of no other way than 4952. If they can't itemize, they can't. They are getting a larger standard deduction and lower income tax rates.

[johnwinston12]

I appreciate your answer. I was just trying to see if there was something I was overlooking that would allow me to push it to a Sch E or something instead of the A. I knew that netting was wrong. That was how it was handled before by one of the nationwide preparers. There are a lot of other problems that I am trying to correct also. Thanks!

[sjrcpa · Accepted solution]

Form 4952 Investment interest

[abctax55]

@johnwinston12 - did you give Susan a no vote for her accurate answer?
I lost a client years ago over this issue - they didn't like the F 4952 position either....

[johnwinston12]

I appreciated the answer and I am not questionning the accuracy of it. I just felt it was not complete enough to satisfy the question, so I am looking for clarification.

[abctax55]

Just because you need clarification doesn't mean a no vote is warranted.
You DO realize that almost ALL of us are volunteers, taking time on April 3 to try & help?

[johnwinston12]

Look, this is my first time using this forum. I appreciated her help. The question was if the response was helpful. I responded no, because I still didn't know what to do. I didn't know it was a critique of her response. I appreciated her response and was able to further my research because of it. I have told her Thanks. Now let it go. I probably will not use this forum again if I have to be hassled to do it.

[abctax55]

buh bye

[sjrcpa]

@johnwinston12 That Not Helpful button is a sore spot with us frequent contributors/volunteers. we have asked the PTB to eliminate it but they won't.

[IRonMaN]

Holy hand holding Batman, that’s a first.  Maybe Intuit should start requiring the posting of phone numbers so that we can follow up with a phone call to see if we can provide more details on each post :open_mouth:

[abctax55]

@IRonMaN  

[johnwinston12]

sjrcpa, I am sorry if the button caused you any grief. That was not my intention. I did not see it as an evaluation of your response, but simply an expression of whether I got my question answered at that point. Since I hadn't, I tried to clarify the question a little better. I appreciated your response and thank you for it. I knew that if the sale had involved a personal residence that the interest on the wrapped mortgage would have to go to Sch A, but if the property used to be a rental it seems that the interest should go somewhere else that would reflect the business nature of it. I was just hoping that I had overlooked something and someone could get me back on track. Unfortunately, my research was correct and your answer helped to verify that. Once again I am sorry and did not mean any disrespect. I found your answer to be both prompt and helpful. It just wasn't the answer that I wanted to hear. Thank you.