Marjorie is single and has the following investment income:
|
Interest on savings
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$2,900
|
|
Municipal bond interest
|
1,500
|
|
Dividends
|
7,600
|
She pays investment interest expense of $15,000. The interest expense relates to all the assets in her portfolio.
1. What is Marjorie's allowable deduction for investment interest?
2. Assume that Marjorie's marginal tax rate is 28%. If she sells stock that produces a long-term capital gain of $3,000, how will the sale of stock affect her investment interest deduction?