How do I report nominee interest income received and paid to a third party on a partnership return?

[George4Tacks]

Use Schedule K - Interest Income - Investment Expense.

[sjrcpa]

I'm leery of the investment expense route. If partners are individuals they cannot deduct investment expenses.

[tagteam]

If the interest had been received in the ordinary course, is there anything wrong with a zeroed-out entry on Line 7 and an attached statement delineating the total interest received and actual recipient's share (assuming the latter is the total received)?