Miller owns a personal residence with a fair market value of $328,250 and an outstanding first mortgage of $262,600, which was entirely used to acquire the residence. This year, Miller gets a home equity loan of $16,413 to purchase new jet skis.

Interest on the $ ----? (279,013 is not correct answer) of this mortgage debt is treated as qualified residence indebtedness.

Feedback The Supreme Court has defined interest as compensation for the use or forbearance of money. The general rule permits a deduction for interest paid or accrued within the taxable year on indebtedness.