Takesha Paid $13,000 of Investment Interest Expense in a Year

question 121

Multiple Choice

Takesha paid $13,000 of investment interest expense in a year in which she earned $4,500 in dividends, $5,400 in interest income, and had a short- term capital gain of $1,000 and a long- term capital gain of $2,200. The capital gains resulted from the sale of stock held as an investment. She has no other investment- related expenses. What is her maximum deduction for investment interest expense, assuming Takesha does not make any elections?

• A) $5,400
• B) $6,400
• C) $13,000
• D) $13,100

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Definitions:

Billion

A numerical value represented by 1,000,000,000 or 10^9 in the international system.

Automatic Stabilizer

Economic policies and programs designed to offset fluctuations in a nation's economic activity without additional intervention by the government or policymakers.

Tax Revenue

The income that the government receives from taxpayers, including both individuals and businesses, used to fund public services and infrastructure.

Multiplier Effect

The relative rise in total income resulting from an additional expenditure.