Law Homework Help

Kasey has been an avid investor since his teenage years, when his uncle taught him the basics of investing. This

year, Kasey incurred investment interest expense of $800. Kasey had $ 200 of non-qualified dividend income and $ 100 of interest income this year since he had a growth focus in his portfolio. Kasey also realized $600 of long term capital gains for the current year. Applying the default rules for the deductibility of investment interest expenses, which of the following statements is correct?

a, Kasey can deduct the full $800 in investment interest expense this year.

b, Kasey’s investment income ( for purpose of the investment interest expense deduction) for the year is $800

c, Kasey will be able to carryover $500 of investment interest expense to deduct against future investment income in subsequent tax years.

d, Kasey can deduct the allowable portion of his investment expense this year subject to the two percent floor that applies to miscellaneous itemized deductions