IRS Form 4952 walkthrough - ARCHIVED COPY - READ COMMENTS ONLY

[@teachmepersonalfinance]

Please feel free to check out our article, where we've written step by step instructions to help you walk through this tax form! www.teachmepersonalfinance.com/irs-form-4952-instructions/ If you’re looking for tutorials for other IRS Forms that you can file directly through the IRS website, check out our free fillable forms page: www.teachmepersonalfinance.com/free-fillable-tax-forms/

[@950vstar]

I have a margin loan that I pay interest on so are we saying that I can't use the advisory fee I pay on this loan as investment expenses on the 4952 form?

[@teachmepersonalfinance]

Although I cannot specifically advise on your situation, I would say that Publication 550 gives some guidance. Margin interest paid in the applicable tax year can be deducted in the year that you paid it. Margin interest is considered to be paid when you actually pay interest to your broker, or when the payment becomes available to your broker through your brokerage account. However, you can only deduct investment interest paid up to the amount of your investment income, then carry forward any excess expense to a future tax year. If your advisory fee is structured in a manner so that it's considered part of the margin interest, then I think you may be able to deduct it. However, if you're paying a separate advisory fee on top of the margin interest, then I believe that you can deduct the margin interest only, but not the fee. I would highly recommend that you discuss this with your accountant or tax professional for specific advice.

[@950vstar]

Does advisory fees go on this form 4952?

[@teachmepersonalfinance]

If you're thinking of investment advisor, tax advisor, or financial advisor fees, they are considered to be miscellaneous itemized deductions, subject to a floor of 2% of your AGI. Under normal circumstances, you would list these fees on Schedule A, but the Tax Cuts and Jobs Act eliminated miscellaneous itemized deductions for tax years 2018 - 2025. As it currently stands, you are not able to deduct advisory fees, unless you can properly claim some part of those fees as a business expense. As written, the law sunsets after 2025, and you would be able to start claiming these fees on Schedule A beginning in 2026.

[@andersonandrew112]

I own some apartment buildings, and recently used a margin loan to pay for renovations on a few units. 1. Is the margin interest deductible if used for this purpose? 2. If I dont have the short term capital gains/dividends to use against this margin deduction, can it be carried forward indefinitely for future use? Thank you