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Strategies & Market Trends : Income Taxes and Record Keeping ( tax ) -- Ignore unavailable to you. Want to Upgrade?

To: crh02 who wrote (2375)	11/10/1999 2:02:00 PM
From: Kaye Thomas	Read Replies (1) \| Respond to of 5810

A CPA said that??? Possibly you misunderstood . . . Margin interest may or may not be investment interest. Assuming you borrowed to buy stock (rather than to take a vacation, buy Viagra, etc.) it's investment interest. Then you can deduct it to the extent of your investment income. Dividends and interest count as investment income. So does capital gain, if it arises from sale of an asset that produces investment income. There's just one catch: if you want to deduct investment interest against long-term capital gain, you have to treat your LTCG (or that portion of it) as ordinary income. You aren't allowed to take a deduction of margin interest (which will reduce your ordinary income) with respect to capital gain that's taxed at a favorable rate. The election is made on the form you fill out for deduction of investment interest, so I'm sure your CPA knows about this. Kaye Thomas, author Fairmark Press Tax Guide for Investments fairmark.com

To: crh02 who wrote (2375)	11/10/1999 9:52:00 PM
From: Spots	Respond to of 5810

By and large, that's a crock. There are exceptions, such as if you didn't create the margin debt to buy securities (such as if you buy a car by writing a check against margin) or you bought tax-exempt securities with it. Probably there are a few more exceptions here and there, but I'd be firing that sucker myself. He should be warning you about the exceptions instead of ladeling out wholesale BS. Spots Edit - Responded before reading the rest of the thread. You got a better answer, but I'm too lazy to retract <g>.