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

To: Q who wrote (351)	1/7/1998 11:54:00 PM
From: Q	Respond to of 5810

Since I didnt get any reply for my Margin Interest question, I've asked the IRS and this is their answer if anyone is interested Margin interest can be deducted. The following information can be found in publication 550, which you may order or download if you wish. Investment Interest If you borrow money that is used to acquire property you hold for investment, the interest you pay is investment interest. You can deduct investment interest subject to the limit discussed later. However, you cannot deduct interest you incurred to produce tax-exempt income. See Tax-exempt income, later, under Nondeductible Expenses. Reference(s):IRC 163; REG 1.163-1; IRC 265; REG 1.265-2 Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity. Reference(s):IRC 163(D)(3)(B) Interest on margin accounts. If you are a cash-basis taxpayer, you can deduct interest on margin accounts as investment interest in the year you paid it. You are considered to have paid interest on these accounts only when you actually pay the broker o r when the interest becomes available to the broker through your account. Receipts for the payment of interest may become available in your account when the broker collects dividends or interest for your account, or sells securities held for you or received from you. But also see Interest Expense and Carrying Charges under Straddles in Chapter 4. Reference(s):RR 70-221 You may wish to view the following documents: irs.ustreas.gov The IRS's new homepage on the World Wide Web went on-line in January. To access IRS information available on-demand, 24 hours a day, point your browser to our web site at irs.ustreas.gov. Even the most novice internet user will find our homepage easy to navigate. Written in a simple, user-friendly format, the web site offers a variety of information and services for both individual and business taxpayers.