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Alex is an investor and buys on the margin, which resulted in him having interest expense...

Alex is an investor and buys on the margin, which resulted in him having interest expense of $35,000 during the year. His investments generated the following income during the year: taxable interest income, $40,000; municipal bond interest $30,000. How much investment interest can Alex deduct?

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Answer #1

maximum deduction is allowed upto net inerest taxable income earnned

in above case interest from municipal bonds are exempted from tax and thus to be exclued from cacluationg net interest income

therefroe investment interest dedcution of 35,000 can be allowed as the taxable intresst income is 40,000 which is higher than 35,000

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