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Strategies & Market Trends : IRS, Tax related strategies--Traders -- Ignore unavailable to you. Want to Upgrade?

To: paul boudreau who wrote (65)	2/17/1998 10:14:00 PM
From: Colin Cody	Read Replies (3) \| Respond to of 1383

Paul, Yes interest on a margin account CAN BE, and likely usually IS deductible, subject to the rules and limitations associated with interest expense payments and accruals. . I wonder who defines "passive activities" (and where) as "any business activity in which you do not materially participate"? . An INVESTOR holds stocks as a PORTFOLIO. A TRADER holds stocks as a CAPITAL ASSET in an Active trade or Business A DEALER holds stocks as INVENTORY. . Colin

To: paul boudreau who wrote (65)	2/17/1998 10:57:00 PM
From: Spots	Read Replies (1) \| Respond to of 1383

Well, I can only answer the way I always did it, which was what I took from the instructions. Investment expenses (direct ones), including specifically margin interest IF it's used to purchase investment property (as opposed to writing a check on your margin account to buy dinner) are deductible up to the amount of investment income. What's investment income may be iffy on the edges, but capital gains, interest, dividends, rents and royalties are definitely investment income. Unused investment expense can be carried forward. There's a form for this, 8xxx as I recall.