### Question
How does Computation of Taxable Income define interest and carrying charges?


### Answer
Under *26 U.S.C. § 263*, **interest and carrying charges** is defined as:

> the excess of—


(A) the sum of—


(i) interest on indebtedness incurred or continued to purchase or carry the personal property, and


(ii) all other amounts (including charges to insure, store, or transport the personal property) paid or incurred to carry the personal property, over


  

(B) the sum of—


(i) the amount of interest (including original issue discount) includible in gross income for the taxable year with respect to the property described in subparagraph (A),


(ii) any amount treated as ordinary income under section 1271(a)(3)(A), 1276, or 1281(a) with respect to such property for the taxable year,


(iii) the excess of any dividends includible in gross income with respect to such property for the taxable year over the amount of any deduction allowable with respect to such dividends under section 243, 244, or 245, and


(iv) any amount which is a payment with respect to a security loan (within the meaning of section 512(a)(5)) includible in gross income with respect to such property for the taxable year

#### Citation:
  - *26 U.S.C. § 263*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter B-Computation of Taxable Income > PART IX-ITEMS NOT DEDUCTIBLE**

