Brandon and Jane Forte File a Joint Tax Return and Decide

question 86

Multiple Choice

Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Fortes' income for the year consists of $120,000 in salary, $1,000 interest income, $1,500 nonqualifying dividends, and $1,100 long-term capital gains. The Fortes' expenses for the year consist of $3,000 in investment interest expense and $900 in tax preparation fees. Assuming that the Fortes' marginal tax rate is 32 percent and they make no special elections, what is the amount of investment interest expense deduction for the year?

• A)$0.
• B)$1,000.
• C)$2,500.
• D)$3,000.
• E)None of the choices are correct.

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Definitions:

Equality Of Income

A state in which income is distributed equally among individuals or groups in society.

Incentive To Produce

Factors or motivations that encourage firms or individuals to engage in production, often driven by the potential for profit or market demand.

Before-Tax Total Income

The total income earned by an individual or a business before any taxes are deducted.

Poorest 20 Percent

The segment of a population that ranks at the bottom fifth in terms of income.