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: Colin Cody who wrote (280)	12/18/1997 12:30:00 PM
From: Nittany Lion	Read Replies (1) of 5810

Colin, You are correct - Form 4952 automatically calculates net investment income by subtracting capital gains from the total gains (in essence leaving short term gains). So, investment interest can be deducted against interest, dividends and S.T. gains etc. The election to treat long term gains as investment income is located right on the 4952 form also. In doing this, the long term capital gain calculated on schedule "D" is reduced by an entry on line 21 of that schedule. Therefore, you are agreeing to be taxed at a rate possibly higher than max. capital gain rate in exchange for being able to deduct your margin interest. Obviously, you should work it out both ways to determine the best scenario. And keep in mind that you must be able to use schedule "A" to deduct investment interest and also, any investment interest not used this year can be carried forward to 1998. Gary

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