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Financial Planning / Tax Strategies


Subject:  Re: debit interest from margin Date:  3/6/2000  9:57 PM
Author:  shortamzn Number:  31067 of 127519

If you have net capital gains from the sale of investment property such as stocks or mutual fund shares, those gains are not treated as investment income unless you specifically elect to include them in investment income on Form 4952. If you make the election, you cannot use capital gains rates for the amount of net capital gains treated as investment income in order to increase your investment interest on Form 4952. If you make the election on Form 4952, the elected amount is subtracted from net capital gains when applying the capital gain tax rates.

You can take the investment interest deduction on line 13 of the schedule A without using the Form 4952 IF:

--All the taxpayer's investment income was from dividends and interest.

--The taxpayer had no other deductible expenses connected with the production of interest and dividends

--the taxpayer's investment interest expenses are not more than his investment income

--the taxpayer had no carryover of investment expenses.
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