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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2300
Experience:  IRS licensed Enrolled Agent and tax instructor
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I have approximately a $50000 investment interest expense

Customer Question

Hi I have approximately a $50000 investment interest expense carry forward from previous years, I am planning on having 150,000 long term capital gain this year from the sale of stock. Can the investment interest expense be used against this coming years long term capital gains?
Submitted: 3 months ago.
Category: Tax
Customer: replied 3 months ago.
Hi should I just stay online for my answer,?
Customer: replied 3 months ago.
My email is***@******.***, I did not sign up for an account just paid the one time PayPal fee
Expert:  emc011075 replied 3 months ago.

Hi. My name is ***** ***** I will be happy to help you.

It is slightly more complicated. You cannot directly reduce your capital gains by the investment interest. The interest is deducted on Schedule A as part of your itemized deduction, subject to 2% AGI limit (meaning you can only deduct what's over 2% of your AGI).

Capital gains are normally not treated as investment but you can elect to treat it that way.

Customer: replied 3 months ago.
How do I decide if it's better to treat capital gains as ordinary income?
Expert:  emc011075 replied 3 months ago.

You will need to prepare your tax return both ways, that's the only way to be sure. But I suspect you are in 28 - 35% tax bracket, which would mean most of your capital gains would be taxed at much higher rate than 15%. There's also AMT (alternative minimum tax) to take in consideration. It may limit your deduction.

Customer: replied 3 months ago.
Thanks since I paid the one time PayPal fee, I'm not on the monthly subscription fee am I? So will I have to worry about recurring fees for the service?
Expert:  emc011075 replied 3 months ago.

I do not have access to billing, that would be the customer service. I will let them know.

Any questions? Is there anything else I can help you with today?

Customer: replied 3 months ago.
No thanks
Expert:  emc011075 replied 3 months ago.

If you have an tax adviser, he should be able to run year-end estimate and have access to a professional tax preparation software. I doubt the retail softwares are capable of making the election.

And if this answered your question, please take a moment to rate my response so that I may receive credit for assisting you today. You find the rating bar on the top of the page – 5 stars. However, if you need clarification, or want to discuss this issue further, let me know. Thank you.

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