The Tax Professionals Blog — investment expenses
Maximizing Investment Expenses
Posted by Lee Reams Sr. on
Investment expenses are deducted from investment income when determining net investment income (NII). NII is used in two important tax computations: the 3.8% Sec 1411 tax on net investment income (NIIT) for higher-income taxpayers and the limitation on the deductibility of investment interest, Sec 163. Investment interest can only be deducted to the extent of gross investment income less allowable investment expenses. Therefore, it is important to understand what is classified as investment expenses for both computations.