[Hosmer]

I’m a little confused about how Interest Expense is handled for S-Corps. Roger has it listed as a separately stated item. “Interest and Dividends” But, it’s also a deduction from gross receipts on form 1120S.

I think I’ve seen it handled both ways on MCQ’s. Am I missing something? Is it included in the deduction for ordinary income? Is it not? Is it somewhere in-between.

REG on Monday. I’d appreciate the help.

Thanks.

Keith

[Kodiak]

I think and I may be wrong, but it relates to investment interest vs. interest expense in ordinary business. So ordinary interest expense (say the s corp took out a loan to purchase equipment) it would be deducted from income, but if you took a loan to purchase bonds for investment, it would be a separately stated item along with the interest income earned from those bonds. I think. Hopefully if I'm on the wrong path someone will chime in and correct me.

Oh and hey, I'm taking REG on Monday as well. Best of luck to you!

[Hosmer]

Thanks for your response, it's helpful. I finally got a sim with that material on it. I think you're right. Interest on the S-corp bank account was separately stated. Interest paid on mortgages and loans were deducted for ordinary income. I'm still hoping I don't get any questions on it.

[Author]

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