The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies

URL:  http://boards.fool.com/the-most-confusing-part-of-tax-preparation-for-10123783.aspx

Subject:  Re: Margin interest expense Date:  3/9/1998  10:49 AM
Author:  TMFTaxes Number:  2518 of 121174

[[The most confusing part of tax preparation for me is figuring whether or not I can claim the margin
interest that I paid to buy stocks in 1997. My margin interest was about $750. Dividends paid on
stocks were about $275. It's very difficult to understand the rules concerning margin interest. They
start talking about passive investments and the like. For several years I have forgone the possible
claim. Even if I claimed it somehow, I'd probably have to use Form 4952.
Does anybody out there claim margin interest?]]

Margin interest (or, more properly "investment interest expense") can get a bit confusing. But you certainly, IMHO, claim those expenses...especially if you itemize your deductions. Any investment interest that is not currently deductible (because your net investment income may not be enough to cover the entire interest expense amount) can be carried forward to be used in future years.

And net invesmtnet income includes not only dividends, but interest, capital gains, royalties, and some annuities. So you may have MORE investment income than you realize, and my qualify for the deduction.

For additional information, check out IRS Publication 550 and Form 4952 and instructions. Do your best to wade through this verbage in order to secure and report your deduction.

TMF Taxes
Roy

SPECIAL NOTE: I try to answer as many questions as I can each week, and I generally select those that have not been asked before. If you don't get a detailed answer to your question, it is probably because my time is so limited during tax season, or because it has already been asked and answered in this folder in the past, or because it has been discussed in the Taxes Frequently Asked Questions area. In order to visit the Taxes FAQ area, go to the Fool's School area (http://www.fool.com/school.htm) and check out "Other Features" in the list box, OR you can jump directly to the Taxes FAQ area (http://www.fool.com/school/taxes/taxes.htm). Additionally, if any references were made to the IRS Web Site, you can get there by pointing your web browser to (http://www.irs.ustreas.gov)

Copyright 1996-2014 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us