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: J R KARY who wrote (1860)	2/8/1999 6:33:00 PM
From: Colin Cody	Read Replies (2) of 5810

Jim Colin can the margin interest be deducted without margin payment ? ??? you mean without depositing $$$ to pay it? There was a Revenue Ruling posted by someone two days ago which says "NO". You may not "borrow" more margin to pay the interest if you want a deduction currently. You must SELL stock, DEPOSIT cash, and leave DIVIDENDS there to cover the interest due. Can the margin interest be itemized as a annual investment expense charged against that year's investment (dividend etc.) income ? Yes, sort of, but the "offset" is an itemized deduction on Sch A. The alternative appears to be clumsy , which is full payment of the margin balance and using the margin interest (including past years ?) as a interest expense ? No need to pay off the full balance. Just deposit enough to cover interest charged + prior year interest if not yet paid. The annual margin interest calculation as a itemized interest expense seems more reasonable - is it acceptable to the IRS ? I don't follow this. The Rev Ruling pretty much covers the rule to follow. Colin

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