Will the interest on a loan to buy medical equipment for my practice be tax deductible?

I am a physician and will be buying into a practice. The practice is divided into a professional component, where we simply supply our services, and a technical component, where we own the equipment, which generates passive income. To buy into the technical component, I will need to take out a big loan. Will the interest on this loan be tax deductible?

The answer depends on what type of business you're talking about. If it's a C corporation (e.g., a professional corporation), then all of the interest on a loan to buy into the practice is considered investment interest (deductible to the extent of net investment income). If it's a partnership, limited liability company, or S corporation, interest is allocated on the basis of the assets of the business. For example, if the practice is valued at $1 million, reflecting equipment of $750,000 and securities held by the business of $250,000, then 3/4 of interest on the loan is treated as business interest (fully deductible) and 1/4 of interest is treated as investment interest.