Reading through a post the other day on another board, someone was claiming that you can deduct margin interest. Is this true?

My sitaution: If I sold some stock in '98 for a loss but also sold another stock for a gain, could I deduct the margin interest that accumulated in the account? I will be about even for the year in my gians/losses. My losses may even out run my gains sold for '98.

How does the IRS view margin interest and how do they track exactly which asset is margined? How could track it?

Corey

check out post 9033 above.

[[Reading through a post the other day on another board, someone was claiming
that you can deduct margin interest. Is this true?]]

If you meet the qualifications, it is very true. Margin interest is generally nothing more than a component of "investment interest". Investment interest has its own set of rules. So you'll really have to see if your situation matches those rules. You can read more about the investment interest deduction in the Taxes FAQ area.

[[ My sitaution: If I sold some stock in '98 for a loss but also sold another stock for
a gain, could I deduct the margin interest that accumulated in the account? I will
be about even for the year in my gians/losses. My losses may even out run my
gains sold for '98.]]

You will need to have "net investment income" in order to get your investment interest deduction. If your short term gains, plus your interest and dividend income (and elected net long term gains) are greater than your investment interest expense and any other investment expenses you might have, then you may well qualify for the deduction.

[[ How does the IRS view margin interest and how do they track exactly which
asset is margined? How could track it?]]

You don't have to associate it specifically with any share of stock. If the interest is deductible, it's deductible on Sch A as part of the interst deduction section. So even if you DO have an investment interest deduction, if you don't itemize your deductions, you'll still receive no tax benefit.

Again, check out my post in the Taxes FAQ area for additional information.

TMF Taxes
Roy

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