Investment Interest Expense

Investment Interest Expense means (see more about entries related to interest in the U.S. here)

interest paid to carry portfolio investments such as bonds, stocks, and undeveloped land. (Investment interest is Interest paid on loans used for investment purposes, such as to buy stock on margin).Tax deductions by non-corporate taxpayers for investment interest expense are limited to the income received from the investment, such as dividends, interest, and capital gains. However, beginning in 1993, capital gains cannot be used for this purpose unless the taxpayer reduces the amount of capital gains that is eligible for the 28% maximum capital gains rate.

Investment interest

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The taxpayer can deduct this interest on Schedule A if you itemize, up to the amount of investment income (not including capital gains or dividends that qualify for the 0% or 15% rates) in the taxpayer report.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.

See Corporate Tax in the U.S. Legal Encyclopedia and Corporate Tax in the International Legal Encyclopedia.

See Dividend in the American Legal Encyclopedia and Dividend in the World Legal Encyclopedia.

Description and Definition of Investment Interest Expense

Interest paid on loans used for investment purposes such as margin loans to buy stock – but not including interest expense from a passive activity. The investment interest expense deduction is limited to the income from investments.

Resources

See Also

Further Reading

• Investment Interest Expense in the West's Tax Law Dictionary
• Investment Interest Expense in “A Dictionary of Taxation”