Question

This year Randy paid $29,050 of interest on his residence. (Randy borrowed $464,000 to buy his residence, and it is currently worth $514,000.) Randy also paid $2,850 of interest on his car loan and $4,725 of margin interest to his stockbroker (investment interest expense). How much of this interest expense can Randy deduct as an itemized deduction under the following circumstances

Answer 1

Answer:

the last part of the question is missing, so I looked for it:

a. Randy received $2,200 of interest this year and no other investment income or expenses. His AGI is $75,000.

b. Randy had no investment income this year, and his AGI is $75,000.

a) Randy can deduct $31,575:

• the mortgage interest is deductible
• the car loan interest is not deductible
• he can deduct $4,725 - $2,200 = $2,525 as investment interest expense

b) Randy can deduct $29,050

• the mortgage interest is deductible
• the car loan interest is not deductible
• since he had no investment revenue, he cannot deduct any investment interest expense