Constance Currently Commutes 25 Miles from Her House to Her

question 56

Essay

Constance currently commutes 25 miles from her house to her existing part time job in the suburbs. Next week she begins a new full time job in another state, and this job location is 100 miles from her existing home. Because of the additional distance Constance is selling her house, and she has rented an apartment that is only 2 miles from her new job. Constance expects to pay the following moving expenses. $$\begin{array} { | l | r | } \hline \text { Insurance } & \$ 1,000 \\\hline \text { Mortgage interest } & 7,500 \\\hline \text { Property taxes } & 3,200 \\\hline \text { Repairs and maintenance } & 800 \\\hline \text { Utilities } & 1,700 \\\hline \text { Depreciation } & 5,700 \\\hline\end{array}$$ Determine if this move qualifies for a moving expense deduction and calculate the amount (if any) of the deduction.

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Definitions:

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, considering all payments of principal and interest.

Duration

A measure of the sensitivity of a bond's price to changes in interest rates, representing the weighted average of the time until a bond's cash flows are received.

Basis Points

A unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument, where one basis point is equal to 1/100th of 1%.

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, adjusted to account for changes in yield.