Lewis Is an Unmarried Law Student at State University, a Qualified

question 75

Multiple Choice

Lewis is an unmarried law student at State University, a qualified educational institution. Last year Lewis borrowed $30,000 and used the proceeds to pay his university tuition. This year Lewis paid $1,500 of interest on the loan. Which of the following is a true statement if Lewis reports $40,000 of salary and no other items of income or expense?

• A) Lewis can deduct all the interest on his student loan for AGI.
• B) Lewis can deduct all the interest on his student loan as an itemized deduction.
• C) Lewis can only deduct $1,000 of the interest on his student loan for AGI.
• D) Lewis can only deduct $1,000 of the interest on his student loan as an itemized deduction.
• E) All of the above are false.

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Definitions:

Purchase Returns

Goods returned to a supplier from a buyer due to issues like defects or dissatisfaction, often leading to a refund or credit.

Periodic System

An inventory accounting system where updates to inventory levels and cost of goods sold are made at the end of an accounting period.

Purchase Discounts

Reductions in the price of goods purchased, usually as a reward for early payment to the supplier.

Freight-In

The cost associated with getting inventory to a business, usually included in the cost of goods sold.