LO4 Stoycho and Selen are married and have the following investment income for 2009 and 2010:

Their adjusted gross income before considering the investment income is $84,000 in 2009 and $73,500 in 2010. Stoycho and Selen pay $9,000 in investment interest in 2009 and $5,000 in 2010. The investment interest is incurred to acquire all the investments in their portfolio.
Write a letter to Stoycho and Selen explaining how much investment interest they can deduct for 2009 and 2010.

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2009 2010 Cash dividends Interest on U.S. Treasury notes Interest on savings $1,200 $1,400 3,000 2,200 2,000 1,500 Interest on state of Montana bonds 800 800 Net long-term capital gain 1,000 500