Investment Income and Expenses›2025 Returns
Contents
2025 Publ 550 (PDF) · 2026-10-03 edition · updated 2026-10-04 · United States
Future Developments . . . . . . . . . . . . . . . . . . . . . . . 1
What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Chapter 1. Investment Income . . . . . . . . . . . . . . . 3 General Information . . . . . . . . . . . . . . . . . . . . . . 4 Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Discount on Debt Instruments . . . . . . . . . . . . . . 18 When To Report Interest Income . . . . . . . . . . . . 23 How To Report Interest Income . . . . . . . . . . . . . 24 Dividends and Other Distributions . . . . . . . . . . . 27 How To Report Dividend Income . . . . . . . . . . . . 33 Stripped Preferred Stock . . . . . . . . . . . . . . . . . . 34 REMICs, FASITs, and Other CDOs . . . . . . . . . . . 35 S Corporations . . . . . . . . . . . . . . . . . . . . . . . . . 37 Investment Clubs . . . . . . . . . . . . . . . . . . . . . . . 37
Chapter 2. Tax Shelters and Other Reportable
Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Abusive Tax Shelters . . . . . . . . . . . . . . . . . . . . . 39
Chapter 3. Investment Expenses . . . . . . . . . . . . 44 Limits on Deductions . . . . . . . . . . . . . . . . . . . . 44 Interest Expenses . . . . . . . . . . . . . . . . . . . . . . . 45 Bond Premium Amortization . . . . . . . . . . . . . . . 48 Nondeductible Interest Expenses . . . . . . . . . . . . 50 How To Report Investment Interest Expenses . . . 51 When To Report Investment Expenses . . . . . . . . 52
Chapter 4. Sales and Trades of
Investment Property . . . . . . . . . . . . . . . . . . . . 52 What Is a Sale or Trade? . . . . . . . . . . . . . . . . . . 53 Basis of Investment Property . . . . . . . . . . . . . . . 59 How To Figure Gain or Loss . . . . . . . . . . . . . . . . 66 Nontaxable Trades . . . . . . . . . . . . . . . . . . . . . . 70 Transfers Between Spouses . . . . . . . . . . . . . . . 72 Related Party Transactions . . . . . . . . . . . . . . . . 73 Capital Gains and Losses . . . . . . . . . . . . . . . . . 74 Reporting Capital Gains and Losses . . . . . . . . . 99 Special Rules for Traders in Securities or
Commodities . . . . . . . . . . . . . . . . . . . . . . . 104
Chapter 5. How To Get Tax Help . . . . . . . . . . . . 105
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
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