2 qns: 1) Can Sch D investment expenses (margin rate etc) be offset against Short Term Capital gain? 2) Can these investment expenses be carried forward to next yr?

[SweetieJean]

To deduct margin interest expenses, you must have enough itemized deductions (ie. Medical, mortgage interest, property taxes, charitable giving, etc) to exceed your Standard Deduction.

[Hal_Al · Accepted solution]

Q1) Can Sch D investment expenses (margin rate etc) be offset against Short Term Capital gain? 

A  1. No. At least no, per se. Investments expenses are an itemized deduction on Schedule A. As such they reduce your total income that is subject to tax. But, they cannot be applied directly to STGC reported on schedule D. 

Q2) Can these investment expenses be carried forward to next yr?

A 2. Yes, but only if disallowed for the current year. Otherwise, you must use them in the year they were paid. That is, you cannot choose to postpone reporting expenses. See the instructions for form 4952, for details. https://www.irs.gov/pub/irs-pdf/f4952.pdf