Brandon and Jane Forte File a Joint Tax Return and Decide

question 7

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 $121,000 in salary, $1,500 interest income, $2,000 nonqualifying dividends, and $2,100 long-term capital gains. The Fortes' expenses for the year consist of $3,525 in investment interest expense and $1,000 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)$1,500.
• C)$3,500.
• D)$3,525.
• E)None of the choices are correct.

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Definitions:

SSE

Sum of Squares due to Error, a measure used in statistical analysis to quantify the variance within data points from the observed values.

Total SS

The total sum of squares in a dataset is a measure of the total variability of the dataset, including both the explained and unexplained variance by a model or variable.

Regression Slope Coefficient

A number that represents the degree of change in the dependent variable for a one-unit change in the independent variable within a regression model.

Simple Linear Regression

A statistical method used to model the relationship between a single independent variable and a dependent variable by fitting a linear equation to observed data.