Income Taxes and Record Keeping ( tax ) Message Board

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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )

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To: Nasty P who wrote (156)	10/29/1997 11:22:00 PM
From: RealMuLan	Read Replies (1) of 5810

Nasty: thanks for your time. Still on credit card interest. I did some reading on Pub. 550. IRS says if you get a loan (haven't said the loan cannot come from a credit card), and immediately put this entire amount of loan into an account (my understanding is that can be a bank or brokage account), then the occurred interest charge can be considered as investment interest expense. So, here is the scenario: I have 0 balance on this credit card. Then because of their offer of low interest rate for the 1st 6 months and no cash transaction fee, I borrow $10k from the card, and put all of the money in a brokage account. And then I also borrow the margin from brokage on this amount of borrowed money. My understanding is that I should be able to deduct both margin interest and the interest charge from the credit card as investment interest expense. Because, honestly, this loan, although is borrowed from the credit card, is not personal interest indeed. I use the entire amount to invest. Am I right? Or am I missing something here? Thank you in advance. And best luck.

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