Interest Expense Input Question - Debt-Financed Passive Investment

[TaxGirl3]

Client borrowed money to invest in an LLC (rental property with a triple net lease).  Client is a real estate professional, but does not materially participate in this activity and so the interest on the borrowed funds should be treated as a passive item and reported on Form 8582 (and then Sched Ep2).

How do I enter the interest in Lacerte?  Is there somewhere specific, similar to UPE entries?  Do I just use a second K-1 input screen?  Something else?

Thank you!

[PhoebeRoberts · Accepted solution]

I personally enter it as a Separately Stated Income and Deduction, under one of the two Passive Items. Don't forget to manually adjust basis to take into account the interest paid with outside funds.

[TaxGirl3]

Thank you, that makes a lot of sense!