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Patricia purchased a home on January 1, 2017 for $1,220,000 by making a down payment of...

Patricia purchased a home on January 1, 2017 for $1,220,000 by making a down payment of $100,000 and financing the remaining $1,120,000 with a 30-year loan, secured by the residence, at 6 percent. During year 2017 and 2018, Patricia made interest-only payments on the loan of $67,200. What amount of the $67,200 interest expense Patricia paid during 2018 may she deduct as an itemized deduction? (Assume not married filing separately.)

Multiple Choice

A) $60,000.

B) $7,200.

C) $0.

D) $67,200.

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Answer #1

ANSWER = D) 67,200

Interest deductible on $1,020,000 of acquisition indebtedness and $100,000 of home equity indebtedness.

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