Question

Troy's financial records for the year reflect the following: Interest income from bank savings account $1,800 Taxable annuity receipts 3,600 City ad valorem property tax on investments 270 Investment interest expense 6,300 Calculate Troy's net investment income and his current investment interest deduction. How is a deduction for any potential excess investment interest treated

Answer 1

Answer and Explanation:

The computation is shown below:

Troy net investment income is

= Interest income generated from saving bank account + annuity receipt taxable - city and valorem property tax

= $1,800 + $3,600 - $270

= $5,130

The current interest deduction for the investment is $5,130

And, the treatment of the potential excess interest of the investment should be carried forward

The same is to be considered