Interest on debt incurred to acquire equity securities is only deductible if the securities have a history of paying regular dividends.

Question

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Interest on debt incurred to acquire equity securities can be deductible regardless of whether the securities have a history of paying regular dividends. The deductibility of interest is generally determined by the use of the borrowed funds and the income-producing potential of the investment, not solely by the dividend history of the equity securities.

Interest on Debt Incurred to Acquire Equity Securities Is Only