This year, Randy paid $31,150 of interest on his residence. (Randy borrowed $828,000 to buy his residence, which is currently worth $920,000.) Randy also paid $3,550 of interest on his car loan and $5,775 of margin interest to his stockbroker (investment interest expense). How much of this interest expense can Randy deduct as an itemized deduction under the following circumstances?

a. Randy received $3,040 of interest this year and no other investment income or expenses. His AGI is $75,000.

b. Randy had no investment income this year, and his AGI is $75,000.