Rick asks:
I purchased stock thru my employer via a loan. Is the interest on this loan deductable? After the loan is paid off, and I sell the stock, can I add the interest on the loan to the cost basis when I calculate the captial gain ?
I can't seem to find this answer anywhere !
Thanx !
My reply:
Hello! Assuming the stock is not tax-exempt then you are allowed to deduct the interest incurred on the loan used to purchase the stock, to the extent of your investment income (the money you earned on your investment). You can carry the excess interest into future tax years and deduct it against those earnings. There is no limit on how long you can carry forward and use up the interest. When you carry forward the deduction, you'll have to file Form 4952 along with your Form 1040 and Schedule A, where you list your interest-deduction amount.
You are not allowed to add the interest to the basis in your stock when you compute your capital gain. The only way you can deduct it is if you itemize your deductions and you have investment income to offset it.
Best wishes,
Gina
http://GLGcpa.com
I can't seem to find this answer anywhere !
Thanx !
My reply:
Hello! Assuming the stock is not tax-exempt then you are allowed to deduct the interest incurred on the loan used to purchase the stock, to the extent of your investment income (the money you earned on your investment). You can carry the excess interest into future tax years and deduct it against those earnings. There is no limit on how long you can carry forward and use up the interest. When you carry forward the deduction, you'll have to file Form 4952 along with your Form 1040 and Schedule A, where you list your interest-deduction amount.
You are not allowed to add the interest to the basis in your stock when you compute your capital gain. The only way you can deduct it is if you itemize your deductions and you have investment income to offset it.
Best wishes,
Gina
http://GLGcpa.com
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