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Regarding Federal tax income Form 4952, should I expect my…

Regarding Federal tax income Form...
Regarding Federal tax income Form 4952, should I expect my client to provide me a form to help me fill out line 1 for "investment interest expense paid"? And if so what is the form number?
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11/29/2017
Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Experience: 3+ decades of varied tax industry exp. Tax Biz owner
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Hello. Happy Holidays. Thank you for choosing this Q&A service for assistance. My name is***** am reading over your inquiry. I will respond to you shortly.

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I looked at the Form 4952 and it appears that you will need information from your client to complete it. I am checking to see where the taxpayer will get the investment interest info from. I will get back to you shortly. Thank you for your patience.

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The Form 1099-INT is the form that will show this information. SEE BELOW:

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Any payer of investment income must issue a Form 1099-INT to all recipients because it shows the amount and type of interest that was paid during the year. Any investor that receives a Form 1099-INT must be able to transcribe the information correctly on to the Schedule A & B Internal Revenue Service (IRS) Form.

REFERENCE SOURCE:

https://www.investopedia.com/articles/tax/10/interest-income.asp

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Customer reply replied 8 months ago
Thanks. I did have another question on this form. I notice that on line 5 is for investment expenses. So how is this different compared to Schedule A investment expenses that are subject to the 2% floor? Are taxpayers simply able to avoid the 2% floor because they are offsetting investment income?

I will check on this and get back to you.

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In a nutshell, Form 4952 helps you determine for yourself -- and the IRS -- how much investment interest you can deduct on line 14 of Form 1040's Schedule A, as well as whether any can be carried forward onto a future tax return's itemized deductions. (You can only use the form and take the deduction if you're itemizing deductions.)

The reason you might have some sum to carry forward is because the amount you can deduct in a given year is limited to your net investment income for that year. Thus, if you have $2,000 in investment interest expense, and just $1,200 in qualifying investment income, you can only deduct $1,200 of interest, and will have to carry forward the remaining $800 into the next tax year's return.

REFERENCE SOURCE:

https://www.fool.com/taxes/2015/07/28/do-i-need-to-fill-out-form-4952.aspx

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Customer reply replied 8 months ago
ok Thanks
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