1040-US: Calculation of Form 4952, line 4a - Gross income from property held for investment

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Question

How does gross income from property held for investment (Form 4952, line 4a) calculate?

Answer

The tax application includes the following as gross income from property held for investment:

  • Interest income entered in Screens B&D, Broker, K1-2, and K1T
  • Dividends entered in Screens B&D, Broker, K1-2, and K1T
  • Royalties entered in Screen Rent with code 6 activity type, Screen 1099M, box 2, and Screen K1-2
  • Other portfolio income entered in Screens K1-2 and K1T
  • Rental of substantially nondepreciable property
  • Net passive income of a publicly traded partnership (PTP)
  • Income from an activity in which taxpayer did not materially participate and is not a passive activity (Screens C and F)
  • Child's income reported on the parent's return (Screen 8814)
  • Net passive income recharacterized as non-passive income from land rentals (Schedule E or Form 4835)
  • Net passive income recharacterized as non-passive income, as indicated by code 1, 2, or 5 in the Recharacterization of passive income field in Screen K1-7 or Screen K1T-2
  • Cancellation of debt income classified as investment income on Screen 1099C.

Related topic: Investment income and expenses FAQs (1040)


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