Ms Lopez Paid $7,260 Interest on a Mortgage on Undeveloped

question 87

Multiple Choice

Ms. Lopez paid $7,260 interest on a mortgage on undeveloped land that she holds as an investment. Ms. Lopez's AGI is $112,200, which includes $4,900 interest income from a certificate of deposit. Which of the following statements is true?

• A) Ms. Lopez can't deduct any of the $7,260 interest expense.
• B) Ms. Lopez can deduct $7,260 interest expense as an itemized deduction.
• C) Ms. Lopez can deduct $4,900 interest expense as an itemized deduction.
• D) Ms. Lopez can deduct $4,900 interest expense as an above-the-line deduction.

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Definitions:

Retail Inventory Method

An accounting method used in the retail industry to estimate inventory cost by relating the cost of merchandise and its retail price.

Retail Inventory Method

An accounting method used by retailers to estimate inventory cost by using a cost-to-retail price ratio.