Faye earns $100,000 of AGI,including $90,000 of salary and $10,000 of interest income.Faye does itemize her deductions.The miscellaneous category of her itemized deductions consists of $1,500 of unreimbursed employee business expenses and a $900 fee paid for investment advice.Faye has paid $11,000 of interest expense on a loan used to purchase stocks.How much of the $11,000 interest expense can be deducted this year?
A)$11,000
B)$10,000
C)$9,100
D)$9,600

Question

Quizplus · Accepted Answer

D)Deduction of investment interest expense is limited to net investment income.Net investment income includes the $10,000 interest income,but is reduced by investment-related expenses remaining after the 2% of AGI floor is applied to the miscellaneous deduction category.
 11ea7cb8_548c_c615_928c_11f56ec16f84_TB1258_00 $9,600 of the $11,000 interest expense is currently deductible,and the balance carries over.

Faye Earns $100,000 of AGI,including $90,000 of Salary and $10,000