Vehicle & Investment Interest Deductibility

Vehicle Loan Interest by Business Use %  •  Investment Interest vs. Net Investment Income
IRC §163(h) (personal interest) IRC §163(d) (investment interest) Form 4952 Schedule A
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A

Vehicle Loan Interest

Total interest paid on auto loan this year
60%
Documented business miles ÷ total miles. Must maintain mileage log. IRC §274(d).
IRC §163(h) (personal interest nondeductible); IRC §274(d) (substantiation requirement for listed property including vehicles); TCJA §11045 (employee business expenses eliminated); Rev. Proc. 2010-51 (mileage log requirements).
B

Investment Interest Expense

Margin account interest, investment loan interest. Form 4952, Line 1.
Dividends, interest, short-term capital gains. EXCLUDES qualified dividends and long-term gains (unless elected).
Qualified dividends / LTCG you elect to include in NII (at cost of losing preferential rate). IRC §163(d)(4)(B).
From prior Form 4952
IRC §163(d) (investment interest limitation); IRC §163(d)(4) (net investment income definition); IRC §163(d)(4)(B) (election to include qualified dividends at cost of ordinary rate); Form 4952 instructions; Schedule A, Line 9.
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