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1 answer:
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Answer:
A) $ 1,440 deduction
B) $1,056 deduction
C) not allowed
Explanation:
IMPORTANT:
As 2020 student loan became interest-free according to Trump administration and extended by Joe Biden up to September 2021
<u>We are going to work the numbers with 2019 values.</u> Which is the closest year one could claim this deduction.
Below AGI of 70,000 we can have a full deduction.
so A) will be a $ 1,440 deduction
Between 70,000 and 85,000 we have a partial deduction.
so we do:
This is the fraction we are disallowed to deduct.
We take our interest expense and multiply by 1 less this amount:
And that is the deduction we can make.
C) as the tax benefit phase-out above $85,000 AGI if Lionel's AGI is $90,000 there is no possible tax deduction