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Specified Private Activity Bond Interest

What is it?

A Specified Private Activity Bond is a bond for private-sector investment. It is used for the development of public facilities. Some of the interest dividends come from mutual funds for the public facility building. Interest is tax-free except for bonds from after August 1986. Interest from specified private activity needs to be put as adjusted income for AMT purposes.

For Form 1099-INT, the interest is put in Box 9. In Form 1040 within our tax software, here is the process.

  • Go to the Federal Section 
  • Select Income.
  • Choose the 1099-INT, DIV, OID options.
  • Select Interest or Dividend Income.
  • Click the Interest Income option and continue.
  • Go to the payer's name, if using Form 1099-INT. 
  • Indicate who the Form 1099-INT is meant for if it is a MFJ return.
  • Enter the Box 9 information. The field is labeled Specified Private Activity Bond.

The interest will be put in Form 6251. It shows an adjustment to the taxpayer's income.

Note: This is simply an example of the procedure, not tax advice.