Brandon and Jane Forte File a Joint Tax Return and Decide

Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Forte's income for the year consists of $120,000 in salary, $1,000 interest income, $1,500 nonqualifying dividends, and $1,000 long-term capital gains. The Forte's expenses for the year consist of $3,000 investment interest expense and $900 tax preparation fees. Assuming that the Forte's marginal tax rate is 30% and they make no special elections, what is the amount of investment interest expense deduction for the year?

A) Zero; investment interest expense is below two percent of AGI
B) $1,000
C) $2,500
D) $3,000
E) None of these

Correct Answer:

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