[Oneday]

NINJA Question –

An individual taxpayer earned $10,000 in investment income, $8,000 in noninterest investment expenses, and $5,000 in investment interest expense. How much is the taxpayer allowed to deduct on the current year’s tax return for investment interest expenses?

From the above question, what are the difference between noninterest investment expenses investment interest expense?

While we’re at it, could someone give me a good definition for “interest”?

I know what it means in terms of loan (interest amount that gets added to loan), but I see that its being used in other context, such as someone having “interest” of something (investment, debt, security, partnership, etc). I sort of understand, but I couldn’t find a good explicit definition.

Thank you.

[Oneday]

Did I post in a wrong topic? Can anyone help? This question relates to one of the Ninja MCQ question..

[Anonymous]

I think the deduction will be up to “net” investment income which is 10,000-8,000=2000.

Investment interest expense is what you incur when you borrow money to buy securities or property because you pay principal + interest when you pay it back.

[Author]

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