Tyrone and Akira incurred and paid the following amounts of interest during 2014:
Home acquisition debt interest $15,000
Credit card interest 5,000
Home equity loan interest 6,500
Investment interest expense 10,000
With 2014 net investment income of $2,000, calculate the amount of their allowable deduction for investment interest expense and their total deduction for allowable interest. Home acquisition principal is less than $1,000,000, and the home equity loan principle is less than $100,000.
An investor sells a stock short in July and its price declines in November?the position has generated a profit. However, the individual does not want to close the position and realize the profit during this tax year. Instead, the investor wants to maintain the position until January so the gain will be taxed next year.
How can the hedge ratio be used to reduce the risk associated with the price of the stock rising while still transferring the gain to the next tax year?
