INSTRUCTIONS: ALABAMA INVESTMENT INTEREST EXPENSE DEDUCTION (Form 4952A)

When an individual, estate or trust pays interest on a loan allocable to property held for an investment, not all of it may be deductible in the current year. This should be filed if your only investment income was from interest or dividends. Form 4952A, discussed in this article, is used to determine the amount of investment interest expense that is deductible for the current year, as well as the amount, if any, which you are permitted to carry forward to future years. This document can be found on the website maintained by the Alabama Department of Revenue. More information can be obtained by reading Federal Form 550.

Alabama Investment Interest Expense Deduction 4952A Step 1: In the first blank box, enter the name or names of the individual, estate or trust as they appear on your tax return.

Alabama Investment Interest Expense Deduction 4952A Step 2: In the second blank box, enter the identifying number associated with the individual, estate or trust.

Alabama Investment Interest Expense Deduction 4952A Step 3: In the third blank box, indicate with a check mark whether you are filing an individual, estate or trust return.

Alabama Investment Interest Expense Deduction 4952A Step 4: On line 1, enter the interest expenses on investment debts paid or accrued during the calendar year printed on the form.

Alabama Investment Interest Expense Deduction 4952A Step 5: On line 2, enter your disallowed investment interest expense as documented on live 5 of the previous year's 4952A return.

Alabama Investment Interest Expense Deduction 4952A Step 6: Add lines 1 and 2. Enter the resulting sum on line 3.

Alabama Investment Interest Expense Deduction 4952A Step 7: Line 4 concerns net investment income. This is the figure of excess investment income over investment expenses. Consult the instructions on the bottom half of the page to learn how to compute this figure.

Alabama Investment Interest Expense Deduction 4952A Step 8: Subtract line 4 from line 3. If the resulting difference is zero or less, enter "-0-" on line 5.

Alabama Investment Interest Expense Deduction 4952A Step 9: On line 6, enter the smaller of line 3 or line 4. This is your allowable investment interest expense deduction.

Alabama Investment Interest Expense Deduction 4952A Step 10: Attach this form to your tax return.