You will write 2 emails: one to your manager, Mr. Johnson, that explains how you are responding to a tax question from a client, and one answering the client. The email to your manager should be written in a professional tone for someone with tax knowledge. The client letter should also be professional, but in easy to understand language. Your client, Mr. and Mrs. Jones, have asked you about being able to deduct investment interest during 2020. They took out a loan to purchase a commercial lot that they will hold for investment and plan on selling in a few years. The interest paid on the loan in 2020 is $5,000. They have heard that the new tax law has changed some of the rules about itemized deductions, but they dont know the details. They have never deducted investment interest before and dont know if there is some kind of limit on what they can deduct. Also they want to know if they will lose the deduction if they cant deduct the interest this year. They plan on having about $26,000 in itemized deductions NOT counting the $5,000 interest deduction. They do not have any investment income this year. Remember they can only deduct investment interest if they itemize.

In the email to your manager: List the code section that applies to investment interest carryforward

Use the format Section (subsection)

Explain to your manager if this contribution will be deducted on the clients return in 2020 and any future years if applicable

Be sure to discuss the limit on deducting investment interest expense and explain what would happen if they could not itemize next year (2021).