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Taxpayer purchased the stock in a S Corporation. Taxpayer…

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Taxpayer purchased the stock in...
Taxpayer purchased the stock in a S Corporation. Taxpayer had investment interest which resulted in a investment interest carryover on their personal return. The assets in the S corporation have been sold. Can the taxpayer now deduct the investment interest be deducted now?
Submitted: 8 months ago.Category: Tax
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9/20/2017
Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 8 months ago
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,067
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 8 months ago

The investment was the S-Corp stock. So the S-Corp (or some other investments) would have to spin off income in order for the interest to be deductible.

In order to deduct any interest, there has to be investment income. The fact that the S-Corp sold some assets does not create investment income. It has to be dividends or "Net gains from the disposition of property held for investment". This would mean the sale of the S-Corp itself. Not its assets.

I hope this answers your questions. If you have any more questions, please feel free to ask and I will be happy to answer.

Thanks! Have a great week!

Roger

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Tax Professional: taxmanrog, Certified Public Accountant (CPA) replied 8 months ago

Hi! Do you have any more questions? I have not heard back from you.

If you don't have any more questions, please don't forget to rate me, as that is how questions are closed.

Thanks!

Roger

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