Bender Borrows $200,000 from His Uncle's Bank and Invests the Proceeds

question 35

Multiple Choice

Bender borrows $200,000 from his uncle's bank and invests the proceeds in various common stocks.He pays $9,000 in interest on the loan during the current year.The stocks produce $7,200 of dividend income,all taxed at the rate of 15%.Bender reports adjusted gross income of $100,000 in the current year.If the dividend income is his only investment income,how much of the interest expense is deductible by Bender?

• A)$7,000
• B)$7,200
• C)$9,000
• D)None of this interest is deductible.

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Definitions:

Lens

A curved piece of glass or other transparent materials used in optical devices to converge or diverge light.

Visual Field

The total area in which objects can be seen in the peripheral vision while the eye is focused on a central point.

Cones

In the retina, specific cells called photoreceptors facilitate color vision and are most efficient in conditions of ample light.

Peripheral Areas

Regions or zones that are outside or on the edge of a central area, often implying a distance from a main or core location.