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:

Insincerity

The quality of not expressing genuine feelings; deceitfulness or fake behavior.

Forming Coalitions

The process of bringing together multiple groups or individuals with the purpose of achieving a common goal or addressing a specific issue.

Incurring Obligations

The act of binding oneself by a social, legal, or moral requirement to do something or incur a liability.

Using Ambiguity

The practice of deliberately employing vague or unclear language to obscure meaning or to avoid making definite statements.