Troy's financial records for the year reflect the following:Interest income from bank savings account $ 900Taxable annuity receipts 1,800Safe deposit box rental (to hold annuity documents) 125Investment interest expense 3,200Calculate Troy's net investment income and his current investment interest deduction. Assume that Troy does not itemize his personal deductions. How is any potential excess investment interest deduction treated?

Answer and Explanation:

The computation of the investment income, the deduction of interest on investment, and the treatment of the deduction of interest on investment is given below:

Investment income is

= $900 + $1,800

= $2,700

And,

Investment expenses = $125

So,

Net investment income is

= $2700 - $125

= $2,575

And,

Investment interest paid = $3,200

The allowed deduction would be lower of interest on investment and the net investment income

So, the allowable deduction would be $2,575

Now the remaining amount i.e. disallowed is

= $3,200 - $2,55

= $625

This amount would be carried forward to the future years

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.