The Investment Interest Expense Deduction is limited to Net investment income (Form 4952, line 6), which in turn depends on lines 4e ("Enter the smaller of line 4d or your net capital gain from the disposition
of property held for investment. See instructions") and 4d ("Net gain from the disposition of property held for investment").
I could not find the instructions that are being referred to. For the purposes of calculating net investment income on Form 4952, would net investment income include a very large capital loss carryover, or would only the $3000 limit on capital loss be taken into account? (That is, would a very large capital loss essentially prevent you from taking this deduction?)
