This will be deductible on A's Form 1040, Schedule A
, Itemized Deductions, and his adjusted basis in the S stock will be reduced by $200 (the adjusted basis of the gifted property) to $800 ($1,000 - $200).
In fact, an analysis of several of Cheshire's Schedule A
's (documents which include information on product and prices) over the last five years reveals that the co-op market outside of Manhattan has not only rebounded from its collapse of the early '90s, but is now experiencing the same market-driven characteristics of its successful counterparts -- e.g., shrinking inventory and elevated prices.
163(h)(3), "qualified residence interest" (QRI) is an itemized deduction on Schedule A. However, taxpayers have deducted interest expense incurred during a rental period in at least three different ways:
469(j)(7) excludes QRI from the PAL rules; thus, they deduct QRI in full on Schedule A, while reporting other expenses and income attributable to the rental as from a passive activity.
If QRI exists, the next issue is the proper reporting of the deduction (either on Schedule A as QRI, or on Schedule E as permitted by Sec.