Colin (Age 40) Is Single and Itemizes His Deductions

question 18

Multiple Choice

Colin (age 40) is single and itemizes his deductions.His AGI is $100,000.Colin provided the following information about his cash expenditures for 2019: Interest on loan to purchase corporate securities $ 900
Interest on American Express card 1,200
Points to refinance his home at the end of December 2,600
Mortgage interest payments 11,800
Real estate taxes 2,100
State income taxes withheld on salary 5,400
Additional state income tax estimated payment 1,200
Contribution to Republican Party 2,000
Contribution to United Way 500
What is the amount of Colin's deductible interest expense if he received $600 in corporate dividends that are taxed at the 15% tax rate?

• A)$11,800
• B)$12,400
• C)$12,700
• D)$14,400

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Definitions:

Snob Effect

Negative network externality in which a consumer wishes to own an exclusive or unique good.

Bandwagon Effect

Positive network externality in which a consumer wishes to possess a good in part because others do.

Network Externalities

Benefits or detriments to a product's value that result from the number of users the product has.

Negative Network Externalities

Adverse effects on a user of a product or service because the number of other users is too large or incompatible in some way.