LO.9 In 2000, Stephen, who is single, purchased a personal residence for $400,000 and COMMUNI CAT IONS took out a mortgage of $250,000 on the property. In May of the current year, when the residence had a fair market value of $640,000 and Stephen owed $220,000 on the mortgage, he took out a home equity loan for $260,000. He used the funds to purchase a recreational vehicle, which he uses 100% for personal use. Write a letter to Stephen Upchurch at 4401 Montgomery Road, Kensington, OH 44427, and explain the maximum amount on which he can deduct home equity interest.

DECISION MAKING COMMUNICATIONS