17 NCAC 06B .3529. INTEREST INCOME PASSED THROUGH TO PARTNERS

Although the interest income passed through to a partner in a partnership retains its same character as when received by the partnership, the expenses incurred in earning such income are deductible by the partnership and net interest income after expenses is reflected in the partner's pro rata share of the income of the partnership.  For interest income subject to federal income tax, the partner's federal gross income reflects the net interest income after expenses incurred in earning the income.  Interest income not subject to federal income tax is not reflected in the partner's federal taxable income.  In these cases, a partner must adjust his federal taxable income as required by G.S. 105‑134.6(b) or G.S. 105‑134.6(c), for the net amount of interest attributable to the partnership.

 

History Note:        Authority G.S. 105‑134.6(b); 105‑134.6(c); 105‑154; 105‑262;

Eff. February 3, 1992.