Helen Derby borrowed $150,000 to acquire a parcel of land to be held for investment purposes. During the current year, she reported AGI of $90,000 and paid interest of $12,000 on the loan. Other items related to Helen's investments include the following:

Investment and annuity income	$11,000
Long-term capital gain on sale of stock	3,500
Real estate tax on the investment land	800

Helen is unmarried, does not itemize her deductions and does not elect to treat the capital gain as investment income. Helen did not have a disallowed investment interest expense amount from the prior year.

a. Helen's net investment income is $10,200. Helen's investment interest expense deduction in the current year is ____________. *ANSWER IS NOT $4,952*

b. Indicate whether the following statements are "True" or "False" regarding the treatment of the portion of Helen's investment interest that is disallowed in the current year.

	The investment interest disallowed is carried over and becomes investment interest expense in the subsequent year.	True
	The investment interest disallowed is lost and not subject to any carryover.	False
	The investment interest disallowed is carried over and may be used to offset any type of income in the subsequent year.	False

c. Complete Helens Form 4952 for the current year. For this purpose, assume that she chooses not to include the long-term capital gain as investment income.

Form 4952 Department of the Treasury Internal Revenue Service (99)	Investment Interest Expense Deduction Go to www.irs.gov/form4952 for the latest information. Attach to your tax return.	OMB No. 1545-0191
		2019 Attachment Sequence No. 51

Name(s) shown on return Helen Derby

Identifying number 123-45-6789

Part I

Total Investment Interest Expense

1	Investment interest expense paid or accrued in 2019 (see instructions) . . . . . . . . . . . . . . . . . . . . . . . .	1	$12,000
2	Disallowed investment interest expense from 2018 Form 4952, line 7 . . . . . . . . . . . . . . . . . . . . . . . . .	2	$0
3	Total investment interest expense. Add lines 1 and 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3	$12,000

Part II

Net Investment Income

4a	Gross income from property held for investment (excluding any net gain from the disposition of property held for investment) . . . . . . . . . . . . . .	4a	$11,000
b	Qualified dividends included on line 4a . . . . . . . . . . . . . . . . . . . . . . . .	4b	$0
c	Subtract line 4b from line 4a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				4c	$11,000
d	Net gain from the disposition of property held for investment . . . . . . . .	4d	FILL IN THE BLANK
e	Enter the smaller of line 4d or your net capital gain from the disposition of property held for investment (see instructions) . . . . . . . . . . . . . . . .	4e	FILL IN THE BLANK
f	Subtract line 4e from line 4d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				4f	FILL IN THE BLANK *ANSWER IS NOT $11,000
g	Enter the amount from lines 4b and 4e that you elect to include in investment income (see instructions)				4g	$0
h	Investment income. Add lines 4c, 4f, and 4g . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				4h	$11,000
5	Investment expenses (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				5	FILL IN THE BLANK *ANSWER IS NOT $200
6	Net investment income. Subtract line 5 from line 4h. If zero or less, enter -0- . . . . . . . . . . . . . . . . .				6	FILL IN THE BLANK *ANSWER IS NOT $10,800*

Part III

Investment Interest Expense Deduction

7	Disallowed investment interest expense to be carried forward to 2020. Subtract line 6 from line 3. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7	FILL IN THE BLANK *ANSWER IS NOT $1,200
8	Investment interest expense deduction. Enter the smaller of line 3 or 6. See instructions . . . . . .	8	FILL IN THE BLANK *ANSWER IS NOT $10,800*