Let me explain my question. I get a margin loan for a mutual fund investment and pay $9,000 interest. I earn $10,000 dividend. Essentially I had $1000 income. According to Schwab webpage this is how tax-law works. According to your explanation I can use only $3,000 of investment expenses to reduce my income, but my income is increased by $10,000. Essentially because of this investment, I have to pay taxes for $7,000, although I had only $1,000 income. It is a moot point that I can carry over $6,000 of investment expenses to next year. The reason is that, if this situation happens every year, I can never use the carry over. To me this does not add up.
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