Margin interest

Vote for Margin interest
Jerome Stoll

Please ask your question here:  How do you know on the basis of this questions content, how much of the margin interest is taxable?

Original Fast Forward Academy test bank question:
Jean and Robert have total wages of $95,000 plus interest income of $3,000 and dividends of $2,000. They paid mortgage interest of $7,000, car loan interest of $2,000, mobile home interest of $4,000, personal loan interest of $1,000 and margin interest of $6,000. How much interest can Jean and Robert deduct on Schedule A?

A. $16,000
B. $20,000
C. $12,000
D. $13,000

Home mortgage and second (mobile) home mortgage interest are deductible, as is $5,000 of the $6,000 investment interest (investment interest deductible up to the amount of taxable income received from the investment) per Pub 529. Interest on a personal or car loan is not deductible.

FFA RTRP Book Reference: CH 6 Standard and Itemized Deductions
Subsection: Itemized deductions
Subject: Interest expense (e.g., mortgage interest, investment interest, tracing rules, points)
Correct Answer: A

Expert Level Question
Please login or register to comment on a question.

Report the question for review or moderation

To the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.

Enrolled Agent Affliated Schools