X Corp issues a bond on March 1, 2014 with a maturity date of February 28, 2024. The issue price and the redemption amount is 100,000. The bonds have a 5% coupon. On March 1, 2019, C purchases the bond with a redemption amount of $10,000 for $7,000. C borrows the full $7,000 to purchase the bond. In 2019, C incurs $550 of interest expense.

Assuming C does not elect to accrue the market discount into income, how much of the $550 is deductible in 2019? If not all, what happens to the excess?