In which of the following entities will all persons who participate in management be protected from liability beyond their investment?

1. C corporation.

2. S corporation.

3. Limited liability company.

4. Limited partnership.

Select one:

a. 1 only.

b. 2 and 3.

c. 1 and 4.

d. 1, 2, and 3.

2. On January 1st of this year Patti purchased a home worth $1.5 million with an interest-only mortgage of $1.2 million. She is currently only paying interest on the mortgage at the rate of 5% annually. What amount of qualified residence interest may she deduct as home mortgage interest on Schedule A of her individual income tax return this year?

Select one:

a. $55,000.

b. $50,000.

c. $60,000.

d. $37,500.