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Investment interest on disposition of property

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    Investment interest on disposition of property

    Client took out a loan from broker to purchase securities. Over three years he rode the securities all the way down to zero. They never produced any income--no dividends, nothing. The capital loss from the securities is easy to handle. But what about the interest on the loan? He never had any income to work the interest against, so it was all being carried forward. Can he take the interest expense deduction once the investment is disposed of? Can he bundle the interest costs into his basis? Or is it too-bad-so-sad?

    I apologize if this has been answered before, but diving several screens deep didn't show me anything relevant.

    Bill

    #2
    You keep carrying investment interest expense forward until you have net investment income to deduct it from. See instructions for form 4952.

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