Ted pays $2,100 interest on his automobile loan, $120 interest on a loan to purchase a computer for personal use, $630 interest on credit cards, and $1,100 investment interest expense. ted has net investment income of $850. ted's deductible interest is

A. $850

Explanation:

The answer is net investment income of $850. This is because the investment interest expense to the extent of net investment income is deductible. The others listed are not deducted. The net investment income can either be capital gains, interest or dividends. When the expenses is less than net investment income, all investment interest expense is deductible and when interest expense is more than investment income, only expenses up to net investment income amount is deducted.

The net Investment income is $850

Explanation:

Given that,

Ted pays $2100 interest loan for automobile

purchased a computer for personal use = $120

interest on credit cards = $630

Investment interest expense = $1100

Ted net investment income of $850.

This is true, because the interest expense of the investment to the net investment income is deducted. The others things listed are not deducted.

The net investment income can either be interest, dividends, or capital gains, when the interest expense is higher than investment income, only expenses up to net investment income amount is deducted. When the expenses is lower or lesser than net investment income, the investment interest expense is deductible.