1. Margaret Lindley paid $15,000 of interest on her $300,000 acquisition debt for her home (fair market value of $500,000), $4,000 of interest on her $60,000 home-equity debt used to buy a new boat and car, $1,000 of credit card interest, and $3,000 of margin interest for the purchase of stock. Assume that Margaret Lindley has $10,000 of interest income this year and no investment expenses. How much of the interest expense may she deduct this year?

A. $23,000

B. $22,000

C. $19,000

D. $18,000

E. None of the choices are correct.

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2. Cory recently sold his qualified small business stock for $90,000 after holding it for 10 years. His basis in the stock is $40,000. Applying the rules as if the stock were acquired in 2021 and assuming his marginal tax rate is 32 percent, how much tax will he owe on the sale?

A. $3,750

B. $7,000

C. $7,500

D. $14,000

E. None of the choices are correct.