- 11 -
personal interest, sec. 163(h)(2)(B), and may be deducted to the
extent of the taxpayer’s net investment income.4 Sec. 163(d).
Investment interest includes interest which is paid or accrued on
indebtedness properly allocable to property held for investment.
Sec. 163(d)(3)(A).
2. Whether Margin Interest Is Investment Interest
Margin interest is interest charged to customers on margin
debt incurred in connection with purchases of stock or
securities. In re Olympia Brewing Co. Sec. Litig., 612 F. Supp.
1370, 1374 (N.D. Ill. 1985). Margin interest generally is
investment interest. See, e.g., Estate of Yeager v.
Commissioner, 889 F.2d 29 (2d Cir. 1989), revg. on another issue,
4 Neither party discussed whether petitioner’s margin
interest is deductible under sec. 163(d). Sec. 163(d) provides
in pertinent part:
SEC. 163(d). Limitations on Investment Interest.–-
(1) In General.--In the case of a taxpayer other
than a corporation, the amount allowed as a deduction
under this chapter for investment interest for any
taxable year shall not exceed the net investment income
of the taxpayer for the taxable year.
* * * * * * *
(3) Investment Interest.--For purposes of this
subsection--
(A) In general.--The term “investment interest”
means any interest allowable as a deduction under this
chapter (determined without regard to paragraph (1))
which is paid or accrued on indebtedness properly
allocable to property held for investment.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Next
Last modified: May 25, 2011