Barb borrowed $100,000 to acquire a parcel of land to be held for investment purposes and paid interest of $11,000 on the loan. She has AGI of $75,000 for the year. Other items related to Barb's investments include the following: $\begin{array}{lr}
\text { Interest and annuity income } & \$ 10,000 \
\text { Long-term capital gain on sale of stock } & 7,500 \
\text { Real estate tax paid and deducted on } & \
\text { investment property } & 500
\end{array}$
a. Determine Barb's current investment interest deduction, assuming she does not make any special election regarding the computation of investment income.
b. Discuss the treatment of Barb's investment interest that is disallowed in the current year.
c. What election could Barb make to increase the amount of her current investment interest
deduction?

Question

Barb borrowed $100,000 to acquire a parcel of land to be held for investment purposes and paid interest of $11,000 on the loan. She has AGI of $75,000 for the year. Other items related to Barb's investments include the following: $\begin{array}{lr}
\text { Interest and annuity income } & \$ 10,000 \
\text { Long-term capital gain on sale of stock } & 7,500 \
\text { Real estate tax paid and deducted on } & \
\text { investment property } & 500
\end{array}$ 
a. Determine Barb's current investment interest deduction, assuming she does not make any special election regarding the computation of investment income.
b. Discuss the treatment of Barb's investment interest that is disallowed in the current year.
c. What election could Barb make to increase the amount of her current investment interest
deduction?

Quizplus · Accepted Answer

The Answer of Barb borrowed $100,000 to acquire a parcel of land to be held for investment purposes and paid interest of $11,000 on the loan. She has AGI of $75,000 for the year. Other items related to Barb's investments include the following: $\begin{array}{lr}
\text { Interest and annuity income } & \$ 10,000 \
\text { Long-term capital gain on sale of stock } & 7,500 \
\text { Real estate tax paid and deducted on } & \
\text { investment property } & 500
\end{array}$ 
a. Determine Barb's current investment interest deduction, assuming she does not make any special election regarding the computation of investment income.
b. Discuss the treatment of Barb's investment interest that is disallowed in the current year.
c. What election could Barb make to increase the amount of her current investment interest
deduction?

Barb Borrowed $100,000 to Acquire a Parcel of Land to Be