Which of the Following Interest Expense Amounts Is Not Deductible

question 78

Multiple Choice

Which of the following interest expense amounts is not deductible in 2018?

• A)Education loan interest of $2,000, assuming the taxpayer is single and has income of $150,000.
• B)Home equity loan interest of $9,000 on a loan of $100,000, the proceeds of which were used to purchase an addition to the taxpayer's primary residence.
• C)Investment interest expense of $10,000, assuming the taxpayer has $15,000 of investment income.
• D)Points of $2,000 paid on a mortgage loan for the purchase of a new principal residence.

Differentiate between simple interest and compound interest.

Understand the impact of compounding frequency on future values.

Grasp the effect of discount rates on present and future values.

Understand how initial deposit amounts impact future savings goals.

---

Definitions:

Industrial Areas

Regions or territories designated for the development and concentration of factories, production facilities, and other industrial operations.

Manufacturing Unit

A manufacturing unit refers to a facility or factory where goods are produced through the combination of labor, machinery, and processing techniques.

License

A personal privilege to do some act or series of acts on the land of another, without possessing any ownership interest in the land. A permit or authorization to do something that, without a license, would be unlawful.

Commercial Purposes

Activities undertaken with the intention of generating profit or revenue, as opposed to personal or non-commercial use.