Question

Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Fortes' income for the year consists of $119,000 in salary, $500 interest income, $1,000 nonqualifying dividends, and $500 long-term capital gains. The Fortes' expenses for the year consist of $2,500 in investment interest expense and $800 in tax preparation fees. Assuming that the Fortes' marginal tax rate is 32 percent and they make no special elections, what is the amount of investment interest expense deduction for the year

Answer 1

$1,500

Step-by-step explanation:

Calculation for the amount of investment interest expense deduction for the year

Using this formula

Investment interest expense deduction=Interest income+ Nonqualifying dividend

Let plug in the formula

Investment interest expense deduction=$500+$1,000

Investment interest expense deduction=$1,500

Therefore the amount of investment interest expense deduction for the year will be $1,500