2009
Department of the Treasury Attachment
Internal Revenue Service (99)
© Attach to your tax return. Sequence No. 51
Name(s) shown on return Identifying number
Section references are to the Internal rules apply to investment interest, personal ● Any interest expense that is capitalized,
Revenue Code unless otherwise noted. interest, trade or business interest, home such as construction interest subject to
mortgage interest, and passive activity section 263A.
General Instructions interest. See Pub. 535, Business Expenses. ● Interest expense related to tax-exempt
interest income under section 265.
Purpose of Form Specific Instructions ● Interest expense, disallowed under section
Use Form 4952 to figure the amount of 264, on indebtedness with respect to life
investment interest expense you can deduct Part I—Total Investment insurance, endowment, or annuity contracts
for 2009 and the amount you can carry
forward to future years. Your investment
Interest Expense issued after June 8, 1997, even if the
proceeds were used to purchase any property
interest expense deduction is limited to your Line 1 held for investment.
net investment income. Enter the investment interest expense paid or Property held for investment. Property held
For more information, see Pub. 550, accrued during the tax year, regardless of for investment includes property that
Investment Income and Expenses. when you incurred the indebtedness. produces income, not derived in the ordinary
Investment interest expense is interest paid or course of a trade or business, from interest,
Who Must File accrued on a loan or part of a loan that is dividends, annuities, or royalties. It also
If you are an individual, estate, or a trust, you allocable to property held for investment (as includes property that produces gain or loss,
must file Form 4952 to claim a deduction for defined on this page). not derived in the ordinary course of a trade
your investment interest expense. Include investment interest expense or business, from the disposition of property
Exception. You do not have to file Form reported to you on Schedule K-1 from a that produces these types of income or is
4952 if all of the following apply. partnership or an S corporation. Include held for investment. However, it does not
● Your investment income from interest and amortization of bond premium on taxable include an interest in a passive activity.
ordinary dividends minus any qualified bonds purchased after October 22, 1986, but Exception. A working interest in an oil or
dividends is more than your investment before January 1, 1988, unless you elected to gas property that you held directly or through
interest expense. offset amortizable bond premium against the an entity that did not limit your liability is
interest payments on the bond. A taxable property held for investment, but only if you
● You do not have any other deductible
bond is a bond on which the interest is did not materially participate in the activity.
investment expenses.
includible in gross income.
● You do not have any carryover of
disallowed investment interest expense from
Investment interest expense does not Part II—Net Investment
2008.
include any of the following:
Income
● Home mortgage interest.
Allocation of Interest Line 4a
● Interest expense that is properly allocable
Gross income from property held for
Expense to a passive activity. Generally, a passive
investment includes income, unless derived in
activity is any trade or business activity in
If you paid or accrued interest on a loan and the ordinary course of a trade or business,
which you do not materially participate and
used the loan proceeds for more than one from interest, ordinary dividends (except
any rental activity. See the Instructions for
purpose, you may have to allocate the Alaska Permanent Fund dividends), annuities,
Form 8582, Passive Activity Loss Limitations,
interest. This is necessary because different and royalties. Include investment income
for details.
For Paperwork Reduction Act Notice, see back of form. Cat. No. 13177Y Form 4952 (2009)
Form 4952 (2009) Page 2