Harry earned investment income of $18,500, incurred investment interest expense of $15,500, and other investment expenses of $9,000 during the current year. Harry may deduct $9,500 of investment interest expense this year and carry forward $6,000 to future years.

Question

Quizplus · Accepted Answer

The deduction is limited to the amount of investment income plus $3,000, so Harry can deduct $18,500 + $3,000 = $21,500 of investment interest expenses. Since Harry incurred $15,500 of investment interest expenses, he can deduct $9,500 this year and carry forward the remaining $6,000 to future years.

Harry Earned Investment Income of $18,500, Incurred Investment Interest Expense