Mason Paid $4,100 of Interest on a Loan That Paid

question 94

Multiple Choice

Mason paid $4,100 of interest on a loan that paid tuition for him to attend a privateuniversity this year. How much of this payment can Mason deduct as interest expense on an educational loan if he files single and reports modified AGI of $90,000?

• A) $2,000.
• B) $2,667.
• C) $4,100.
• D) $4,000.
• E) None of the choices are correct.

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Definitions:

Credit Checks

A review of an individual's or company's financial history, often performed by a lender or financial institution, to assess the risk of lending money or extending credit.

Interest-bearing Asset

A type of investment that earns interest over time, such as savings accounts, certificates of deposit, and bonds.

Default Risk

The risk that a borrower will not make the required payments on a debt.

Trade Credit

An arrangement where a buyer can purchase goods on account without paying cash upfront, with payment to the seller due at a later date.