Brandon and Jane Forte File a Joint Tax Return and Decide

question 46

Multiple Choice

Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Forte's income for the year consists of $120,000 in salary, $1,000 interest income, $1,500 nonqualifying dividends, and $1,000 long-term capital gains. The Forte's expenses forthe year consist of $3,000 investment interest expense and $900 tax preparation fees. Assuming that the Forte's marginal tax rate is 30% and they make no special elections, what is the amount of investment interest expense deduction for the year?

• A) $1,000.
• B) $3,000.
• C) $2,500.
• D) Zero; investment interest expense is below two percent of AGI.
• E) None of the choices are correct.

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Definitions:

Deep Sleep

A stage of sleep characterized by slow brain waves, known as delta waves, associated with physical renewal and repair.

Rhythmic Sleep Pattern

The cyclical patterns of sleep phases, including non-REM and REM sleep, that occur throughout a sleep period.

Conifers

A group of cone-bearing seed plants, predominantly evergreens, that includes pines, spruces, and firs, among others.

Herbivores

Organisms that feed exclusively or mostly on plant matter.