What is maximum amount of investment interest expense

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Reference no: EM132016295

1. In the current year, Jakim earns $10,000 in net investment income and incurs $15,000 of investment interest expense. What is the maximum amount of investment interest expense he is allowed to deduct this year?

A) $0

B) $5,000 deductible this year; $10,000 carried forward to next year

C) $10,000 deductible this year; $5,000 carried forward to next year

D) $15,000 deductible this year; nothing to be carried forward to next year

2. In 2016, Julio earned $10,000 in net investment income and incurred $15,000 of investment interest expense. Julio paid off the loan in early 2017, so he only paid $3,000 of investment interest expense in 2017. He earned $12,000 of net investment income in 2017. How much investment interest expense can Julio deduct in 2017?

A) $3,000

B) $8,000

C) $5,000

D) $0

Reference no: EM132016295

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