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Firlakuza [10]
3 years ago
8

Phil and Joan Crawley made the following payments during the current year: Interest on bank loan (loan proceeds used to purchase

U.S. Series EE savings bonds) $4,000 Interest on installment charge accounts 500 Interest on home mortgage for period April 1 to December 31 2,700 Points paid to obtain conventional mortgage loan on April 1 900 The Crawleys had net investment income of $3,000 for the year. What is the maximum amount that the Crawleys can deduct as interest expense in calculating itemized deductions for the current year? A. $3,600 B. $6,600 C. $7,600 D. $8,100
Business
1 answer:
lidiya [134]3 years ago
7 0

Answer:

C. $7,600

Explanation:

For itemized duduction the type of interest will be those related to:

  •    Investment interest (limited to your net investment income) and
  •    Mortgage interest including points

The interest paid to the bank which are 4,000 will be deductible until his investment income of 3,000

so 1,000 dollars will be deductible

Then we have 2,700 interest on mortgage

and 1,900 paid for mortgage points

the total will be 1,000 + 2,700 + 1,900 = 7,600

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