Discuss within 200 words how Mutual bonds of income affects investment interest expense for a taxpayer. Does it increase the allowed deductible investment interest expense or have no effect upon the deductibility of investment interest expense? Mutual bonds are a form of investment vehicles that have the ability to generate a wide array of forms of income. These forms of income include annuity income, interest income, dividend income as well as capital gain income. The tax treatment for mutual funds depends primarily on the type of income that these funds generate. Another important factor to the tax treatment is the tax bracket that the taxpayer falls into. There are many tax implications when investing in any of the discussed investment vehicles. It is important that investors educate themselves in these tax implications especially when these investments have the ability to generate an array of forms of incomes.