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Edna recently took out a loan for $15,000 in order to purchase a stock that she thinks is undervalued. The loan terms are 7% annual
Edna recently took out a loan for $15,000 in order to purchase a stock that she thinks is undervalued. The loan terms are 7% annual interest with interest-only payments due each year for five years. At the end of the five-year period the entire loan principal is due. When Edna closed on the loan on July 1, 2020, she invested $10,000 of the loan proceeds in the stock and $5,000 in new furniture. Her investment income in 2020 equals $1,000. How much investment interest expense can she deduct in 2020?
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