Which of the Following Interest Expense Amounts Is Not Deductible

question 94

Multiple Choice

Which of the following interest expense amounts is not deductible in 2019?

• A)Education loan interest of $2,000, assuming the taxpayer is single and has income of $150,000.
• B)Home equity loan interest of $9,000 on a loan of $100,000, the proceeds of which were used to purchase an addition to the taxpayer's primary residence.
• C)Investment interest expense of $10,000, assuming the taxpayer has $15,000 of net investment income.
• D)Points of $2,000 paid on a mortgage loan for the purchase of a new principal residence.

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Definitions:

Adjustment Columns

Refers to columns in a worksheet or financial statement used to record adjustments to certain accounts before preparing the final financial statements.

Long-Term Asset

Assets that are expected to provide economic benefits beyond one year, such as equipment, real estate, and intellectual property.

Discounting

The process of determining the present value of a payment or a stream of payments that will be received in the future.

Adjustments

Entries made in accounting records at the end of an accounting period to allocate revenues and expenses to the period in which they actually occurred.