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Author: math999man Big red star, 1000 posts Old School Fool Global Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121598  
Subject: Deducting Margin Interest in CY2011 Date: 1/9/2011 11:19 PM
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I have considerable margin interest from cy2010 - several thousand dollars. Now, I can not do anything about cy2010 - it seems that I can not write any of the margin interest off from cy2010 taxes.

But lets talk about CY2011 - the upcoming year. I know some of the basic rules about margin interest - i.e. I must pay it in cash, etc.. I am VERY VERY flexible about what I can sell at end of any year (like cy2011) if I wanted a short or long capital gain or loss. I have a
lot of stocks (both short and long) that are loosing and gaining (any combo you can think of !). No matter what net result I end up as far of total net stock loss or total net stock
gain, I can never deduct margin interest !

I suspect the main reason if that I do NOT itemize deductions ! I live in an apartment (no home, no mortgage, limited investment expenses (i.e. fool.com letters, and not much more), charity, no medical expenses to speak off, etc.. ) - in other words - I just take the standard single person deduction.

I am not going to get home mortgage just to deduct it and be able to take off margin interest - or get married to deduct margin interest.

With the flexibility I have in my investments (loss, gain, short, long, carryover from previous years), there must be legal some way of deducting margin interest in cy2011.

Any suggestions ? Or this only way is via the itemized deduction approach ? For CY2010 taxes - I am using TURBO tax and I assume that the program is using losses/gains/short/long/carryover loss, etc.. as best possible, but for CY2011 what can be done so that I can ensure deducting margin interest made in cy2011 for cy2011 taxes.

I think it is better to ask now to get a handle what comes down the road - December cy2011.

math999man
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111909 of 121598
Subject: Re: Deducting Margin Interest in CY2011 Date: 1/10/2011 3:06 AM
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I think it is better to ask now to get a handle what comes down the road - December cy2011.

That road has no curves. The only way to deduct margin interest is on Schedule A. So I suggest you stop fretting about it since, as you noted, it's silly to chase deductions. The one exception is if you amped up your charitable contributions. You'd still be out money, but it would be going to a good purpose.

Phil
Rule Your Retirement Home Fool

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111910 of 121598
Subject: Re: Deducting Margin Interest in CY2011 Date: 1/10/2011 3:38 AM
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Only the amount of miscellaneous deductions that are greater than 2% of your income can be deducted. If your income is high enough, the margin interest can't be deducted.

Some who don't own homes are able to itemize. Charitible contributions, personal property taxes and state taxes are deductions. It might be possible to itemize in alternating years by shifting the timing of charitible contributions (making two years worth every other year). Deductible taxes are deducted in the year paid. You may have some leeway of when some of your state taxes are paid. If you pay property tax on a car, that portion of the registration is deductible.

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111911 of 121598
Subject: Re: Deducting Margin Interest in CY2011 Date: 1/10/2011 6:22 AM
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Only the amount of miscellaneous deductions that are greater than 2% of your income can be deducted. If your income is high enough, the margin interest can't be deducted.

Investment interest is deducted in the Interest portion of Schedule A, not the investment expense part of Miscellaneous deductions. It's not subject to the 2% floor.

Phil
Rule Your Retirement Home Fool

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 111912 of 121598
Subject: Re: Deducting Margin Interest in CY2011 Date: 1/10/2011 1:20 PM
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Investment interest is deducted in the Interest portion of Schedule A, not the investment expense part of Miscellaneous deductions. It's not subject to the 2% floor.

Thank you for the correction.

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