Lewis Is an Unmarried Law Student at State University, a Qualified

question 32

Multiple Choice

Lewis is an unmarried law student at State University, a qualified educational institution. Last year Lewis borrowed $30,000 and used the proceeds to pay his university tuition. This year Lewis paid $1,500 of interest on the loan. Which of the following is a true statement if Lewis reports $40,000 of salary and no other items of income or expense?

• A) Lewis can deduct all the interest on his student loan for AGI.
• B) Lewis can deduct all the interest on his student loan as an itemized deduction.
• C) Lewis can only deduct $1,000 of the interest on his student loan for AGI.
• D) Lewis can only deduct $1,000 of the interest on his student loan as an itemized deduction.
• E) All of these are false.

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Definitions:

Leisure

Time available for ease, relaxation, and activities one chooses to engage in beyond compulsory activities like work or chores.

Consumption

The use of goods and services by households or individuals, constituting one of the primary components of economic activity.

Nonlabor Income

Income received from sources other than employment, such as investments, pensions, or gifts.

Wage Rate

The amount of money that an employee is paid per unit of time, such as an hour, often analyzed in labor economics.