Is my margin account interest deductible?

February 8, 2012

From:  Steve
Date:  30 Jan 2012

Dear Mr. Gray,

I have a question about an article you wrote back in 2009 The Interest Expense For Your Margin Account May Not Be Tax Deductible.

I read the article and I believe that my margin account interest is indeed tax deductible. My question is on which form is the margin interest to be reported. If I understood correctly you note that it should be reported on 4952. However it looks to me that that form is for property and not stocks. If my assumption correct then there must be some other form where the margin interest on stocks can be reported. Any ideas would be most appreciated.

Thanks
Steve

Answer

Date:  08 Feb 2012

Hello Steve,

In that article, I explained that interest paid for a margin account may be deductible in different places, depending on what the money was used for.

Assuming the money was used for investment in securities other than tax-exempt securities, the interest is investment interest expense and should be reported on Form 4952. Stocks and bonds are considered to be property held for investment for this purpose.

Good luck!
Mike Gray

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