Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 8DQ
To determine
State the limitations on Person D’s mortgage interest deduction. Explain the strategy should Person D consider to maximize her mortgage interest deduction.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Ghislaine has bought a house. She borrowed most of the price of the house from Monster Bank, which holds a fixed charge over the house as its securityWhich of the following descriptions of the legal relationship between Ghislaine and Monster Bank is accurate? A. Ghislaine is the bank's receivable (debtor) and Monster Bank is Ghislaine's mortgageeB. Ghislaine is the bank's payable (creditor) and Monster Bank is Ghislaine's mortgagorC. Ghislaine is the bank's bailor and Monster Bank is Ghislaine's mortgageeD. Ghislaine is the bank's receivable (debtor) and Monster Bank is Ghislaine's ballee
M2
Michaela owns a principal residence in Georgia, a townhouse in San Francisco, and a yacht in Cape Cod. All of the properties have
mortgages on which Michaela pays interest.
a. For which residences can Michaela deduct mortgage interest?
Principal residence plus one of the two other residences
Feedback
▼Check My Work
Qualified residence interest is interest paid or accrued during the taxable year on indebtedness (subject to limitations) secured by any property
that is a qualified residence of the taxpayer.
b. What are the limitations on Michaela's mortgage interest deduction? What strategy should Michaela consider to maximize her mortgage
interest deduction?
Michaela's deduction is limited to interest on acquisition indebtedness up to $1,000,000
or $
highest
if the debt existed at December 15, 2017
100,000 X if incurred after that date. Therefore, she should choose the second residence that will result in the
interest deduction.
Chapter 10 Solutions
Individual Income Taxes
Ch. 10 - Prob. 1DQCh. 10 - Prob. 2DQCh. 10 - Prob. 3DQCh. 10 - Prob. 4DQCh. 10 - LO.2 David, a sole proprietor of a bookstore, pays...Ch. 10 - LO.2 Jayden, a calendar year taxpayer, paid 16,000...Ch. 10 - Prob. 7DQCh. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - Prob. 10DQ
Ch. 10 - LO.5 Thomas purchased a personal residence from...Ch. 10 - Prob. 12DQCh. 10 - Prob. 13DQCh. 10 - LO.6, 8 William, a high school teacher, earns...Ch. 10 - LO.2 Barbara incurred the following expenses...Ch. 10 - Prob. 16CECh. 10 - Prob. 17CECh. 10 - Prob. 18CECh. 10 - Prob. 19CECh. 10 - Prob. 20CECh. 10 - Prob. 21CECh. 10 - Prob. 22PCh. 10 - Prob. 23PCh. 10 - LO.2 Paul suffers from emphysema and severe...Ch. 10 - LO.2 For calendar year 2019, Jean was a...Ch. 10 - LO.2 During 2019, Susan incurred and paid the...Ch. 10 - In May, Rebeccas daughter, Isabella, sustained a...Ch. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 33PCh. 10 - Prob. 34PCh. 10 - On December 27, 2019, Roberta purchased four...Ch. 10 - Prob. 36PCh. 10 - Prob. 37PCh. 10 - Prob. 38PCh. 10 - LO.2, 3, 4, 5, 6, 7 Linda, who files as a single...Ch. 10 - LO.2, 3, 4, 5, 6, 7 For calendar year 2019, Stuart...Ch. 10 - Prob. 41CPCh. 10 - Marcia, a shareholder in a corporation with stores...Ch. 10 - Prob. 4RPCh. 10 - Prob. 1CPACh. 10 - Prob. 2CPACh. 10 - Prob. 3CPACh. 10 - Kurstie received a 800 state income tax refund...Ch. 10 - Which of the following would preclude a taxpayer...Ch. 10 - Prob. 6CPA
Knowledge Booster
Similar questions
- LO.5Miller owns a personal residence with a fair market value of $195,000 and an outstanding first mortgage of $157,500, which was used entirely to acquire the residence. This year, Miller gets a home equity loan of $10,000 to purchase a new fishing boat. How much of this mortgage debt is treated as qualified residence indebtedness?arrow_forward3. Ralph and Sybil own a home in Memphis, which is insured by a standard homeowners policy. They also rent a beach house in Destin on an annual basis. Rodney, their insurance agent, suggests that they consider increasing the limit on personal property at the beach house, because the standard homeowners policy provides a limit of only_of the personal property limit on their primary residence. a. 25 percent b.10 percent. c.15 percent d. 5 percentarrow_forwardMort owns a property. Jessica Rosen holds a first mortgage against it, and Alex Nelligan holds a second mortgage. Mort defaults on his mortgage payments. Ms. Rosen forecloses without joining Mr. Nelligan in the foreclosure suit. The property is sold to Shelia McBride at the foreclosure sale. What are Mr. Nelligan’s rights?arrow_forward
- Hw.27. Zoya has a first mortgage and a smaller home equity loan. Zoya took out the home equity loan on January 3, 2021. It was not used to build, buy, or improve her home. The equity loan proceeds were used to purchase a new car and pay off credit cards. During the year, she paid $6,350 in interest on her first mortgage and $1,490 in interest on the home equity loan. What amount of mortgage interest can Zoya deduct on her Schedule A (Form 1040), Itemized Deductions? $1,490 $4,860 $6,350 $7,840arrow_forwardRay loses his job as a result of a corporate downsizing. Consequently, he falls behind on the mortgage payments on his personal residence. His friend Ted would like to make the delinquent mortgage payments for him. a. Could the payments be structured so that Ray can deduct the mortgage interest? b. Could the payment arrangement deny both Ray and Ted a mortgage interest deduction? c. Could the payments be structured so that Ted can deduct the mortgage interest?arrow_forwardMr. and Mrs. George enter into a written, signed agreement to buy a house owned by Samantha Jones. In the contract, it says that the sale will go forward if the Georges obtain financing for the mortgage. What kind of condition is this? Explain.Now, assume that the Georges successfully obtained the financing; but, and Samantha Jones is now refusing to sell them the house. Do the Georges have any recourse? Explain in detail.arrow_forward
- Mf3. Randolph is single. He took out a $550,000 mortgage to purchase a main home in February 2020. The loan is secured by the home. In April 2021, Randolph decided to buy an RV to use as a vacation home. The mortgage loan was $200,000 and is secured by the RV. Which of the following is correct? a) The mortgage interest for the RV is not deductible because the main home was not used to secure the loan. b) The mortgage interest is limited to $375,000. c) The RV purchase does not meet the definition of a home; therefore, the deductible mortgage interest is limited to $550,000. d) The total of both mortgages does not exceed $750,000; therefore, all of the interest paid on both mortgages is deductible.arrow_forwardYour cousin and her partner have a combined gross income of $10,111 and monthly expenses totaling $3,205. They plan to buy a house with a mortgage whose monthly PITI will be $2,000. (a) What is your cousin and her partner's combined housing expense ratio? (b) What is their total obligations ratio? (c) For what kind of mortgage can they qualify, if any? (d) If they do not qualify for an FHA mortgage, by how much should they reduce their monthly expenses in order to be eligible? (Set up an equation and solve it.)arrow_forward3. Jose obtained a loan from Pedro amounting to PhP1 Million. As a security, Jose mortgaged his land (with a fair market value of PhP700,000.00) to Pedro. Subsequently, Jose sold the land to Mario. What is the effect of the sale of the land to the obligation of Jose to Pedro? Assuming Jose could not pay his obligation, what are the remedies of Pedro? Explain your answer.arrow_forward
- Lanny and Shirley divorced in 2018 and do not live together. Shirley has custody of their child, Art, and Lanny pays Shirley $23,000 per year. All property was divided equally.arrow_forwardEinstein is indebted to Galileo P30, 000,000.00 secured by a mortgage on his motorcycle. Galileo abandoned his right over the said mortgage, can he still demand payment of the obligation?arrow_forwardSs.229.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT
Individual Income Taxes
Accounting
ISBN:9780357109731
Author:Hoffman
Publisher:CENGAGE LEARNING - CONSIGNMENT