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Buffy has a brokerage account and buys on the margin, which resulted in the interest expense...

Buffy has a brokerage account and buys on the margin, which resulted in the interest expense of $36,400 during the year. Income generated through a brokerage account was as followed:

Municipal interest $72,800
Taxable dividends and interest 364,000

If required, round any division to two (2) decimal places and use in subsequent computation. Please round your final answer to the nearest dollar.

How much investment interest can Buffy deduct?

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Answer #1

Buffy's total income = Municipal interest + Taxable dividends and interest

=364000+72800

=436,800

Her interest expense is 36400, she is entitled to deduct her interest expense in proportion to Taxable dividends and interest/Total income:

=36400*364000/436800

=30333

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