Question

Look at Romney’s Form 4952

His investment interest expense deduction is $_______________ .

Has he elected to include any long-term capital gains or qualified dividends in investment income? Yes / No

What percentage of the investment interest expense is from flow-through entities? _____

Look at Romney’s Schedule A

How much did he deduct on Schedule A for investment interest expense? $___________

For questions 5 and 6, you will determine where he deducted the rest of the investment interest expense and why? You probably want a 2011 Form 4952 from the IRS website to get the instructions (Forms & Publications, Prior Year Forms & Pubs).

(This question is about the general rule for when investment interest expense is not reported on the Schedule A.)

Where besides Schedule A might an individual taxpayer report investment interest expense? (Can either cut & paste from the instructions or you can paraphrase the instructions.)

List two specific forms or schedules besides Schedule A where investment interest expense is reported.

(This question is specific to Romney but your answer to question 5 should help you answer this question.)

Find the rest of Romney’s investment interest expense and indicate which schedule or form it is reported on and why he reported there. (Hint: look in the statements)

Using the statements, provide the three amounts of investment interest expense not reported on the Schedule A including the source of the amount (e.g., dollar amount and what trust does it come from)

Here is the link to Romney's Tax return: http://www.taxhistory.org/thp/presreturns.nsf/Returns/9F81699BC7D6DE238525798F0051C35F/$file/M_Romney_2011.pdf

Thank you so much!:)

Answer 1

Romney’s investment interest expense deduction is $640876

Yes. He has elected to include qualified dividends in investment income but net long-term capital gains was included as well. The amount of qualified dividends was $2221956. The amount of capital gain including mutual funds was $6809063.

The percentage of the investment interest expense from pass-through entities is 0.

Romney has deducted $56904 as investment interest expense on Schedule A to form 1040.

Investment interest expense deduction are available to a taxpayer as an itemized deduction under Schedule A to Form 1040 and sometimes with Form 4952. However, form 4952 is not required if the investment interest expense is not more than investment income arising out of interest & Ordinary dividends less qualified dividends and there is no carryover amounts from the precious year regarding investment interest expense.

Investment expense as a general rule include allowable deductions other than interest expense itself that are directly connected with earning the investment income (at gross).