C is corrent. The requirement is to determine the correct statement regarding an individual taxpayer’s deduction for interest expense on investment indebtedness. The deduction for interest expense on investment indebtedness is limited to the taxpayer’s net investment income. Net investment income includes such income as interest, dividends, and short-term capital gains, less any related expenses.
A is incorrect. The investment interest expense deduction is limited to net investment income.
A is incorrect. The investment interest expense deduction is limited to net investment income.
D is incorrect. The investment interest expense deduction is limited to net investment income.
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