Melissa earned net investment income of $11,000 during 2016 and incurred investment interest expense of $3,000 during the year related to a stock purchase.She incurred other investment interest expenses of $7,000 during the year.Melissa is limited to a deduction of $3,000 of investment interest expense in 2016.

Question

Quizplus · Accepted Answer

Melissa can deduct investment interest expenses up to the amount of her net investment income, which is $11,000. Since her total investment interest expenses are $10,000 ($3,000 + $7,000), she can deduct the full $10,000, not just $3,000.

Melissa Earned Net Investment Income of $11,000 During 2016 and Incurred