deduct loan interest paid to purchase a partnership interest

[John Arena]

My individual client took out a personal loan to purchase a partnership interest.  Is the loan interest deductible to him in any way on his 1040?

[abctax55]

UPE on Sch E, page 2.  Separate line item is *my* preference.

[Accountant-Man]

Is he A) a managing partner of the business or B) is it merely an investment interest?

A) UPE like was said;

B) Investment interest on Schedule A after F4952.

[John Arena]

Thanks!

[PATAX]

@John Arena tomorrow when they ask you to accept a response as a solution make sure you give abc credit for that... Many accountants have never seen that...

[John Arena]

Not a managing partner, just a limited partner (LLC member).

[Accountant-Man]

So he borrowed money for an investment. F4952.

[John Arena]

Yes, he took out a personal bank loan to buy into a medical practice, which is an LLC taxed as a partnership.  Would that loan and the related interest expense still considered to be investment?

[Accountant-Man · Accepted solution]

Is he a working doctor in the practice? If yes, then UPE.

If no, then F4952

[qbteachmt]

Perhaps it needs to be clarified: "F4952"

Means "put it on Form 4952."

[John Arena]

He is, thanks for the help.

[Accountant-Man]

B) Investment interest on Schedule A after Form 4952.

[Accountant-Man]