The sale of stock will have to be reported on Schedule D. If the proceeds that you received for the stock are less than your cost basis then you would report capital losses on those sales. If you have a net overall loss after offsetting your losses against any gains that you may have, then up to $3,000 of the losses can be used to offset other income that you may have. If your overall losses exceed $3,000, then the excess amount can be carried over and used next year.
The margin interest that you paid may be deductible on Schedule A as an itemized deduction up to the amount of investment income (such as interest, certain dividend income, and elected capital gains in some instances) that you had in the account.
See pages 32 - 34 - http://www.irs.gov/pub/irs-pdf/p550.pdf