Ms. Kerry, who itemized deductions on Schedule A, paid $15,000 interest on funds borrowed to acquire taxable bonds. Her AGI is $100,000, which includes $19,700 of interest income. How much of the interest expense can she deduct?

Question

Quizplus · Accepted Answer

Interest paid on funds borrowed to acquire taxable bonds is fully deductible as an investment interest expense, up to the amount of net investment income, which in this case is $19,700. Since the interest expense is $15,000, she can deduct the full $15,000.

Ms Kerry, Who Itemized Deductions on Schedule A, Paid $15,000