TAXATION

INTEREST EXPENSE: Part 1 John and Mary have adjusted gross income of $173,000 in 2023 During the year, they paid the following interest expense: Home mortgage interest: House bought in 2011 for $900,000 Estimated fair market value $1,000,000 Remaining mortgage (3% interest) 2023 800,000 Unsecured bank loan of $30,000 - Proceeds of loan used to make home improvements Home equity loan (secured by mortgage) taken out in 2023 - $100,000 loan proceeds used for daughter's wedding, vacation, personal expenditures Auto loan $20,000 Interest on credit cards Interest on John/Mary student loans from college interest expense on loan - proceeds were used to buy stock (2023 nonqualified dividends and interest income total $4,000) INTEREST PAID 26,000 check answer - 5,000 3,000 1,500 1,000 3,000 7,000 REQUIRED: (a) Calculate John and Mary's MAXIMUM allowable deduction for interest paid AFTER ALL LIMITATIONS for 2023. Classify the portion deductible "For AGI" and the portion deduction "From AGI as an itemized deduction". (b) If there are any carryovers, so indicate by type and amount. (a) for AGI $1,000; itemized $ 30,000 (b) Investment interest expense carryover $3,000 Would your answer change (if any) if the house had been purchased in 2019? check answer - itemized deduction would be $28,000 - for AGI/carryover no change 6