I have a very simple question. Partnership owns land and has a loan on it. Partneship makes mothly payments. What line on the 1065 would this expense go?
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The mortgage payments, minus the interest, reduces the liability. Interest is expensed on page 1.
Depending on your next question, will be additional info.Last edited by BOB W; 03-06-2012, 09:11 PM.This post is for discussion purposes only and should be verified with other sources before actual use.
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Where are principal payments applies
Where would the principal payments go. I know they reduce liability but where are they on page 1.Originally posted by BOB W View Post
Thanks,Comment
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It is not an expens
The portion of the payment that is principal wouldn't be an expense. The accounting entry would be to reduce (debit) Liability and reduce (credit) cash. The interest portion would be increase (debit) interest expense and reduce (credit) cash. Therefore, the interest only is the expense and it will go page 1 as interest expense. The reduciton in liability and in cash will stay on BS and it will not go to P&L.
Hope that helps.
Thanks,
nkComment
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You get no tax deduction for the principal payments.Originally posted by RNuse09 View Post
As far as interest payments. Depends on what the land was used for.
Was it used for farming?
Was it used as rental property?Jiggers, EAComment
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You need to understand accounting 101 to solve your problem. Liability issues are on the balance sheet which is not on page 1. Try page 4 or 5, not sure on a partnership return.
And I agree, interest can be non-deductible based on what it is/will be used for. Capitalization of interest would be the other option.Last edited by BOB W; 03-07-2012, 01:55 PM.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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