Category: Individuals/Deductions
& Credits Copyright 1998, The Tax Resource Group. All
rights reserved. Telephone 800-578-3498. Internet: www.taxresourcegroup.com I can see no reason to think that a taxpayer with excess investment interest expense loses the carryover privilege by choosing not to itemize. Section 163(d) sets forth a computation for determining the amount of investment interest expense that is allowed in a given tax year. That amount flows to Schedule A and is included with such other itemized deductions as the taxpayer may have. If the taxpayer chooses not to itemize, then I think the allowed portion for the tax year is simply lost. Section 163(d)(2) provides that any amount not allowed as a deduction for any taxable year is treated as an amount of investment interest expense paid or accrued in the succeeding tax year. There is no indication in the Code, the commentary sources I have, the instructions to Form 4952, or the committee reports surrounding the 1969 enactment of the investment interest limitation that the carryover privilege is affected in any way by whether or not the taxpayer itemizes. I think the plain words of the statute lead to that conclusion, and the absence of any indication to contrary stands as confirmation. |
