TAX PROBLEMS

6. Investor incurs investment interest of $100k. To what extent is it deductible in the current year if:

(a) Investors only investment income during the year is $80k of interest on a corporate bond, and she has $10k in deductible state intangible taxes on investments? Are there any other tax consequences to her?

(b) The interest of $100k is on loans whose proceeds are used to purchase tax exempt bonds?

(c) The facts are the same as in (a) and (b) above, except that the proceeds of the loans are used 50% to purchase tax exempt bonds, and 50% is to buy corporate bonds, and the bonds are her only investments?