Box 13 · code H
K-1 box 13 code H: investment interest and the carryforward
Code H is the one letter in box 13 that almost always has a companion: box 5 interest income. The pair is what the deduction is measured against, and the part that does not fit is not lost.
The wording on the form is: Investment interest expense. Read against the year printed in the K-1 header, because the letters are reassigned between years.
Where the letter goes
Form 4952 line 1, then Schedule A line 9, with any excess carried forward on Form 4952 line 7.
Investment interest is deductible only up to net investment income. Form 4952 is where that comparison is made, which is why the K-1 figure is an input rather than a deduction.
What has to be true before any of it can be claimed
- The partner itemizes. Investment interest deducted on Schedule A is lost to a partner taking the standard deduction.
- There is net investment income to measure against, from this K-1 or from the partner's other investments.
- The partner has elected, or has not elected, to treat qualified dividends and long-term gains as investment income — the election changes the ceiling and is made at partner level.
What the statement has to show
Code H usually prints an amount directly rather than STMT, because the figure fits in one space. What does not fit is the partner's own carryforward history, and that is the number a reviewer will ask about when the same client has had H for several years.
What goes wrong, and the shape of it
- H entered as a Schedule A charitable or miscellaneous item. It is neither. The line is the investment interest line, and putting it elsewhere is a deduction that survives review only until someone reads the form.
- The disallowed part dropped. The portion over the limit carries forward indefinitely at the partner level. A worksheet that records only the allowed amount destroys the record of what is still available.
- Box 5 ignored. H and box 5 are read together. A K-1 with H and no box 5 is a client paying investment interest without investment income, and the carryforward starts at that first year.
What the reading step does here, and what it does not
K1 FastTax reads the H amount and the page it came from, and flags the pair when box 5 is present. The Form 4952 computation, the partner's prior carryforwards and the investment income election are outside what a K-1 can tell anyone.
The rest of box 13 is in the full box 13 code list , and the printed wording of the box itself is on the box 13 page . This page describes where a code goes; it is not tax advice, and the Partner's Instructions for the year on your K-1 are the authority.
Plain answers
Questions about box 13 code H
What is K-1 box 13 code H?
Investment interest expense. It is the partner's share of interest the partnership incurred on investment indebtedness, and it is deductible only against net investment income, which is why it passes through Form 4952 before it reaches Schedule A.
What happens to the part I cannot deduct this year?
It carries forward. The disallowed investment interest stays available at the partner level and is claimed in a later year when there is enough net investment income to absorb it. It is not refunded and it is not lost.
Does code H have anything to do with box 5?
They are read together. Box 5 is interest income and code H is interest expense; the first is what the second is measured against. A K-1 carrying H without box 5 is worth a question to the issuer before it is worth an entry.
Why would a K-1 carry H with an amount and no statement?
Because the amount fits in the box. Investment interest expense is a single figure, unlike the portfolio deductions under AE, so the letter and the amount together are usually the whole story on the K-1 side.
Read box 13 code H from your own K-1
K1 FastTax keeps the letter, the amount and the page together, keeps a statement reference as STMT rather than zero, and records which rows a person checked.