Helen borrowed $150,000 to acquire a parcel of land to be held for investment purposes. During 2016, she paid interest of $12,000 on the loan. She had AGI of $90,000 for the year. Other items related to Helen's investments include the following:
Investment income ..............................$11,000
Long-term capital gain on sale of stock .........3,500
Investment counsel fees .............................200
Helen is unmarried and does not itemize her deductions.
a. Determine Helen's investment interest deduction for 2016.
b. Discuss the treatment of the portion of Helen's investment interest that is disallowed in 2016.