Jared earned investment income of $22,000 and incurred investment interest expense of $14,000 during 2011.He incurred other investment expenses of $7,000 during the year.Jared may deduct $14,000 of investment interest in 2011.

Question

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Investment interest expense can be deducted up to the amount of investment income earned, which in this case is $22,000. Therefore, Jared can deduct $14,000 of investment interest. The other investment expenses may also be deductible depending on their nature and the limitations imposed by the tax code.

Jared Earned Investment Income of $22,000 and Incurred Investment Interest