Problem:
During the year Dana incurred $13,000 of investment interest expense in a year in which she earned $4500 in dividends, $5400 in interest income, and had a short-term capital gain of $1000 and a long -term capital gain of $2200. The capital gains resulted from the sale of stock held as an investment.
Required:
Question: What is her maximum deduction for investment interest expense if Diana makes the proper elections?
a $5,400
b. $9,900
c. $12,100
d. $13,000
Note: Please show how you came up with the solution.