Form 4952: Investment Interest Expense Deduction

A tax form distributed by the Internal Revenue Service (IRS) used to determine the amount of investment interest expense that can be deducted and any interest expense that can be carried forward to a future tax year. Form 4952 limits the investment interest expense deduction for an individual, estate or trust to its net income from investment.

The IRS has different rules that taxpayers must follow depending on where interest comes from and whether it is investment, personal, business or mortgage-related. If an investor pays or accrues interest on a loan and then uses the proceeds for several purposes, the taxpayer may have to allocate the interest to ensure that the right interest rule is used.