Problem 10-31 (LO. 5) This year, Amy purchased a personal residence at a cost of $1,000,000. She borrowed $800,000 secured by the home to make the purchase. This year, she paid interest expense on this mortgage of $12,000. How much may she deduct? $ 750,000 x Feedback Check My Work 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