Margin Interest Deductible? - Tax Forum - Tax Help Forum, Payroll Tax Forum, Business Tax Forum, Tax Questions, Free Tax Advice

shoshin · 01-08-2007, 06:16 AM

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I have bought and sold a stock using margin in 2006. Can I deduct margin interest?

taxman · 01-08-2007, 06:38 AM

No interest margin is not deductible. You should include interest income in your 1040 at the end of the year.

shoshin · 01-09-2007, 12:03 AM

Quote:

Originally Posted by taxman

No interest margin is not deductible. You should include interest income in your 1040 at the end of the year.

Why couldn't you list it on Form 4952?

theCPA · 01-09-2007, 04:30 AM

here is a really great link on Investment Income and Expense (inluding capital gains and losses)

http://www.irs.gov/pub/irs-pdf/p550.pdf

taxforum · 01-09-2007, 04:43 AM

No you can not just file 4952. Income reflected on line 4 of Form 4952 has to be reported on Schedule B, D or E of your 1040.

The Form 4952 is a computational form only, limiting the amount of investment interest deductible as an itemized deduction on Schedule A. It does not report income.

shoshin · 01-09-2007, 07:04 AM

Quote:

Originally Posted by taxforum

No you can not just file 4952. Income reflected on line 4 of Form 4952 has to be reported on Schedule B, D or E of your 1040.

The Form 4952 is a computational form only, limiting the amount of investment interest deductible as an itemized deduction on Schedule A. It does not report income.

Well of course you need to do schedule D. I'm just asking if you made lets say $10,000 of short term (not long term) capital gains on a stock and you paid $1000 of margin interest to do so, why wouldn't you be able to use Form 4952 to deduct the $1000 of the $10,000 taxable gains so instead of paying taxes on $10,000 gains you pay taxes on $9,000 of gains? Why does form 4952 exist even? I mean Form 4952 is called "Investment Interest Expense Deduction".

taxforum · 01-10-2007, 06:27 AM

4952 is used just for clarification of what you have reported on your 1040. it shows how you have got the ending numbers. It is very common in taxes that you provide supplemental forms together with the major ones.

shoshin · 01-10-2007, 06:37 AM

Thanks. I know my questions must seem really dumb

alex · 01-10-2007, 06:45 AM

The are not dumb most of people do not know that

taxforum · 01-10-2007, 06:48 AM

You are very welcome! Make sure that you tell all your friends about this forum

Really thanks for stopping by and hope to see you in the future