Stephanie, a Taxpayer in the 24% Marginal Tax Bracket, Borrows

question 67

Multiple Choice

Stephanie, a taxpayer in the 24% marginal tax bracket, borrows $100,000 at 7% interest to invest in 6% tax-exempt municipal bonds (annual loan interest expense is $7,000) .What is Stephanie's interest expense deduction?

• A)$0
• B)$1,000
• C)$6,000
• D)$7,000

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Definitions:

Voting Shares

Shares that give the shareholder the right to vote on important issues such as electing directors and approving mergers.

Credit Balance

A situation in an account where the amount of credits exceeds the amount of debits, indicating that money is owed to the account holder.

Common Stock

Equity securities that represent ownership in a corporation, with voting rights and potential for dividends.

Consolidated Equipment

Assets that are combined from different departments or subsidiaries within a company for reporting purposes, often in the context of financial statements.