Deducting Interest Expense: The Party's Over (For Some)
Document Type
Article
Keywords
income tax deductions;capital gains
Publisher
American Institute of Certified Public Accountants
Publication Source
Journal of Accountancy
Abstract
The article discusses investment interest expense tax deduction. Net investment income is the excess of a taxpayer's investment income over investment expenses. Investment income includes dividends, interest, annuities and royalties. Investment expenses are those deductible expenses directly connected with the production of investment income, such as safe-deposit box rentals, financial adviser fees and subscriptions to financial journals. Investment expenses, however, don't include interest paid on a loan. In deciding whether to make this special election, taxpayers with marginal rates above 28% must compare the cost of deferring the interest deduction to a future year with the cost of losing the lower 28% tax on capital gains. Taxpayers whose marginal rate is 28% or lower have nothing to lose by rnaking the election and may party on.
Comments
Published by American Institute of Certified Public Accountants in Journal of Accountancy, volume 177, Issue 5, Pages 29-30.
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