Question

Emeril borrows $340,000 to finance taxable and tax-exempt investments. He incurs $18,000 investment interest expense, allocated equally between the taxable and tax-exempt investments. Ignore any possible investment interest expense limitation. How much of the interest expense is deductible, and where is it deductible?A) $18,000 for AGIB) $18,000 from AGIC) $9,000 for AGID) $9,000 from AGI

Answer 1

Answer:

correct option is D) $9,000 from AGI

Explanation:

given data

borrows = $340,000

investment interest = $18,000

solution

we know here that he investment in 2 part equally between the taxable and tax-exempt investment

so here exemption will be

exemption = $\frac{interest}{no of investment}$    ........................1

put here value in equation 1

exemption = $\frac{interest}{no of investment}$

exemption = $\frac{18000}{2}$

exemption = $9000

so

correct option is D) $9,000 from AGI