1.Matilda Morse incurs interest expense on loans used to purchase investments producing taxable income. The amount of the interest expense is $5000 and the amount of her investment income is $4500 (none of this investment income qualifies for a reduced tax rate).

What is her allowable deduction for investment interest expense for 2019?

2.Ted invests $30,000 in cash for a 1/3rd interest in a partnership. He is also responsible for 1/3rd of a $20,000 partnership recourse loan. The partnership passes through $1,000 of income to Ted and Ted withdraws $2000 from his partnership account. After these events, the partnership also pays off $7,000 of the loans listed above.

What is Ted's amount at risk after all of the events above?