investment_interest_limit

investment_interest_limit - Required: [1] Assuming they do...

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Topic: The investment interest expense limitation (Sec. 163(d)) In February 2010, Jill and Jerry borrow $100,000 at 8% interest to buy stock. They receive qualified dividends of $2,000 from the stock. They have $1,000 of interest income from other investments. They pay $8,000 of interest expense on the borrowed funds. In October 2011 they sell the stock for $104,000. They pay-off the loan and pay $7,000 of interest. They received $1,000 of qualified dividends before they sold the stock and again have $1,000 of interest income.
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Unformatted text preview: Required: [1] Assuming they do not elect to have the qualified dividends or the long-term capital gain taxed at ordinary rates in either year, how much investment interest expense can Jill & Jerry claim as an itemized deduction in 2010? And in 2011? [2] Assuming they elect to have their qualified dividends and any long-term capital gain taxed at ordinary rates, how much investment interest expense can Jill & Jerry claim as an itemized deduction in 2010? And in 2011?...
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