@AbrahamT @DaveF1006
Thank you for your response.
I am not sure I fully comprehend, "Only the margin expense upto the amount from the Substitute payment in lieu of dividend would be allowed. Any excess amount will "NOT" be allowed to be carried forward."
The article https://turbotax.intuit.com/tax-tips/investments-and-taxes/what-is-form-4952-investment-interest-exp... states, " The IRS does allow you to carry forward the disallowed deduction into future years, however. In this example, you can use the $2,000 in disallowed expenses for this year in a future year, but the same restrictions continue to apply. You must have net investment income to deduct qualifying investment interest."
Could we use the following example?
Margin Interest: $125,000
1. STCG and Non- Qualified Dividends of $50,000- The margin interest will offset this. So interest left= 75,000
2. LTCG and QD: I can elect to treat them as #1. If I do, interest left to carryover is 25k, and if I don't, interest carried forward is $75k?
3. Let us assume PIL was 10k in this scenario- This is not offset by margin interest and won't affect the amount of margin that can be carried forward in scenario 2 (either 25k or 75k based on the elections made for #2.) I will need to pay federal and state income taxes only on this amount.
Is that inaccurate?
Thank you.
