Lewis and Laurie are married and jointly own a home valued at $240,000. They recently paid off

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Lewis and Laurie are married and jointly own a home valued at $240,000. They recently paid off the mortgage on their home. In need of cash for personal purposes unrelated to the home, the couple borrowed money from the local credit union. How much interest may the couple deduct in each of the following alternative situations (assume they itemize deductions no matter the amount of interest)?
a. The couple borrows $40,000 and the loan is secured by their home. They use the loan proceeds for purposes unrelated to the home. The couple pays $1,600 interest on the loan during the year and the couple files a joint return.
b. The couple borrows $10,000 unsecured from the credit union. The couple pays $900 interest on the loan during the year and the couple files a joint return.
c. The couple borrows $110,000 and the loan is secured by their home. The couple pays $5,200 interest on the loan during the year and the couple files a joint return.
d. The couple borrows $110,000 and the loan is secured by their home. The couple pays $5,200 interest on the loan during the year and the couple files separate tax returns. Determine the interest deductible by Lewis only.
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Taxation Of Individuals And Business Entities 2015

ISBN: 9780077862367

6th Edition

Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

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