Shellie, a Single Individual, Received Her Bachelor's Degree in 2017

question 57

Multiple Choice

Shellie, a single individual, received her Bachelor's degree in 2017, and took a job with a salary of $45,000 per year.In 2018, she began paying interest on qualified education loans.She was able to pay $1,500 in 2018.Which of the following statements is correct?

• A)The full $1,500 is deductible in arriving at adjusted gross income (AGI).
• B)If her payment had been $3,000, only $2,000 would have been deductible in arriving at AGI and the $1,000 excess would have been treated as nondeductible consumer interest.
• C)If her income had been $60,000, the deductible amount would have been phased out.
• D)Taxpayers are not allowed a deduction for education loan interest in 2017.

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Definitions:

Amortized

Gradual reduction of a debt over a period of time through regular payments, which may include portions of both principal and interest.

Fully Depreciated

The status of an asset after its cost has been completely allocated over its useful life, leaving it with no book value.

Book Value

The net value of a company's assets minus its liabilities, as recorded on the balance sheet.

Special Acquisition Fees

Charges or expenses directly associated with the acquisition of a new business, property, or significant asset, often unique and non-recurring.