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Discussion:Investment interest expense for C Corp stock versus S Corp.
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Discussion Forum Index --> Advanced Tax Questions --> Investment interest expense for C Corp stock versus S Corp.
Discussion Forum Index --> Tax Questions --> Investment interest expense for C Corp stock versus S Corp.
Delilah (talk|edits) said:
| 14 July 2009
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| I have a client who recently purchased C Corp stock. He wants to claim the interest expense but of course has no passive income. He has the ability to change to an S Corp (knowing the Scorp can claim interest expense on page 2 of Schedule E) however can he change to an S Corp and file the interest expense on Schedule E Page 2 when the original money was used to purchase C Corp stock?
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RoyDaleOne (talk|edits) said:
| 14 July 2009
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| I believe Harry has a comment that covers this tropic.
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Riley2 (talk|edits) said:
| 15 July 2009
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| Under the debt reallocation rules under Notice 89-35 and Reg. 1.163-8T, the debt must be reallocated on the date of the S election. See IRS Letter Ruling 9040066. Thus, you will need to determine the nature of the assets held by the S corporation on the date of the election.
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