Brandon and Jane Forte File a Joint Tax Return and Decide

question 96

Multiple Choice

Brandon and Jane Forte file a joint tax return and decide to itemize their deductions. The Forte's income for the year consists of $120,000 in salary, $1,000 interest income, $1,500 nonqualifying dividends, and $1,000 long-term capital gains. The Forte's expenses for the year consist of $3,000 investment interest expense and $900 tax preparation fees. Assuming that the Forte's marginal tax rate is 30%, what is the amount of investment interest expense deduction for the year?

• A) Zero; investment interest expense is below two percent of AGI.
• B) $1,000
• C) $2,500
• D) $3,000
• E) None of these

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Definitions:

Enforceable

Capable of being imposed or complied with; in legal context, describes a contract or provision that can be legally executed or acted upon.

Void Contract

A contract that lacks legal validity and enforceability from the outset, meaning it has no legal effect and cannot be enforced by either party.

Infant

A very young child, especially one newly or recently born.

Illegal

Illegal refers to actions or activities that are prohibited by law or statute.