7633. Are interest expenses deductible if market discount bonds are purchased or carried with borrowed funds?Nuco Employeercline202014-10-01T14:27:00Z2014-10-01T14:27:00Z1148849Summit Business Media7199614Site Map/Investments/Bonds/Discounts_fs_Premiums/Market Discount/DispositionTaxFactsDefaultArticle2007-01-30T00:00:00Z121461115-00-tf2.xml1115.00;#1861;#0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900242457EFB8B24247815D688C526CD44D009C4E67E972694125ABDA91AC61F5E51FTax Facts 2Are interest expenses deductible if market discount bonds are purchased or carried with borrowed funds?17300.0000000000TaxFactsDefaultArticle2010-01-14T22:25:16ZSBMEDIA\moss-admin7633. Are interest expenses deductible if market discount bonds are purchased or carried with borrowed funds?If interest is paid on borrowing or is incurred or continued by the taxpayer in order to purchase or carry taxable market discount bonds, deduction of the interest expense may be subject to limitation and deferral.IRC Secs. 1277(a), 1278(a)(1)(C). Certain short sale expenses (see Q 7528, Q 7529) may be treated as interest within this rule.IRC Sec. 1282(c). See General Explanation–TRA ’84, p. 98. See Q 7937 for details. Any amount deductible under these rules will also be subject to the general limit on the otherwise allowable deduction of investment interest (see Q 7933).