Earl,who earned investment income of $13,500,incurred investment interest expense of $7,700,and other investment expenses of $9,000.Earl may carry over $3,200 of investment interest and deduct it in the future.

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Investment interest expense in excess of investment income is considered a miscellaneous itemized deduction subject to a 2% limit. However, any unused investment interest expense can be carried over to future years. In this scenario, Earl has $5,800 of excess investment interest expense ($13,500 - $7,700 - $200). Therefore, he can carry over up to $3,200 of that amount ($5,800 - $3,200 = $2,600). So, Earl may carry over $3,200 of investment interest and deduct it in the future.

Earl,who Earned Investment Income of $13,500,incurred Investment Interest Expense of $7,700,and