Melissa earned net investment income of $11,000 during 2015 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 2015.

Question

Quizplus · Accepted Answer

Melissa can deduct investment interest expenses up to the amount of her net investment income, which is $11,000. Therefore, she can deduct the full $10,000 of investment interest expenses ($3,000 + $7,000) in 2015.

Melissa Earned Net Investment Income of $11,000 During 2015 and Incurred