1. Bridgetts son, Clyde, is $12,000 in arrears on his residential mortgage payments. Of the $12,000, $7,500 represents interest and $4,500 represents principal.

1. If Bridgett pays the $12,000 to the lender, how much can she deduct? How much can Clyde deduct?

2. If Bridgett pays the $7,500 of interest to the lender and lends or gives $4,500 to Clyde, who pays the $4,500 of principal, how much can Bridgett deduct? How much can Clyde deduct?

3. If Bridgett gives or lends the $12,000 to Clyde who pays the lender, how much can he deduct? How much can Bridgett deduct?

4. Advise Bridgett and Clyde on how the payment should be made.

2. Marvin spends the following amounts on a house he owns:

Repair to roof $1,100

Carpeting for the living room 1,200

Painting of the exterior 4,000

Replacement of front door 800

1. How much of these expenses can Marvin deduct if the house is his principal residence?

2. How much of these expenses can Marvin deduct if he rents the house to a tenant?

Classify any deductible expenses as deductions for AG! or as deductions from AG!.