Tony Is Married and Files a Joint Tax Return

question 91

Multiple Choice

Tony is married and files a joint tax return.He has investment interest expense of $190,000 on a loan made to him to purchase a parcel of unimproved land.His income from investments (interest and annuities) totaled $36,000.After reducing his miscellaneous deductions by the applicable 2% floor,the deductible portion amounted to $5,600.In addition to $2,800 of investment expenses included in miscellaneous deductions,Tony paid $7,200 of real estate taxes on the unimproved land.Tony also has a $9,000 net capital gain from the sale of another parcel of unimproved land.Calculate Tony's maximum investment interest deduction for the year.

• A)$190,000.
• B)$36,000.
• C)$35,000.
• D)$26,000.
• E)None of the above.

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Definitions:

Health Insurance

A type of insurance coverage that pays for medical and surgical expenses incurred by the insured as a result of illness or injury.

Marginal Benefit

The extra pleasure or benefit derived from acquiring or making an additional unit of a product or service.

Muscle Contraction

The activation of tension-generating sites within muscle fibers, leading to shortening or elongation that enables movement.

Muscle Strength

The maximum amount of force a muscle or group of muscles can exert in a single effort.