Royalties shortinterest term capital gains 21

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Unformatted text preview: ment Interest, dividends*, royalties, shortInterest, term capital gains 21 Investment Interest Expense x …Investment Income Exceptions: Investment x Long-Term Capital gains may be Long-Term treated as ordinary income to increase treated Investment Interest Expense deduction Investment y *JGTRRA of 2003 “qualified dividend income” is not “investment income” for determining the “investment interest expense” deduction. However, the LTCG election may be applied to “qualified dividend income.” 22 Interest on Qualified Educational Loans x Interest on loans for qualified educational expenses of half- time or greater students, spouse, and dependents when the time loan was made, is deductible as follows: loan Year 2008/09 Maximum Deduction $2,500 x Deduction was available only for first 60 months of accrued interest (repealed as of 1/1/02) x Deduction is FOR AGI and is phased-out @ $145,000 for MFJ and $70,000 for others in 2008 ---- ($150,000 for MFJ and $75,000 for others in 2009) 23 Interest on Qualified Educational Loans x Phase-out for high income taxpayers Reduction of deductible portion of = Modified AGI - threshold amount × deductible amount $15,000 student loan interest x Thresholds: MFJ $120,000 ($30,000 phase-out range) Other $ 60,000 ($15,000 phase-out range) EXAMPLE Tom paid $4,000 of...
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