Judy incurred $58,500 of interest expense this year related to her investments.Her investment income includes $15,000 of interest,$9,000 of qualified dividends,and a $22,500 net capital gain on the sale of securities.The maximum amount of Judy's investment interest expense deduction for the year is:

Question

Quizplus · Accepted Answer

The deduction for investment interest is limited to the amount of net investment income reported.If Judy elects to treat the capital gain and qualified dividends as investment income,the deduction is $46,500 ($15,000 interest + $9,000 qualified dividends + $22,500 net capital gain).However,if she so elects,her capital gain and qualified dividends will not be eligible for beneficial capital gains tax rate treatment.

Judy Incurred $58,500 of Interest Expense This Year Related to Her