MCGRAW-HILL'S TAX.OF INDIV.+BUS.2020
20th Edition
ISBN: 9781259969614
Author: SPILKER
Publisher: MCG
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Question
Chapter 7, Problem 57P
a.
To determine
Determine whether Person S should treat the
b
To determine
Identify the amount of cost to be incurred for Person S or saved by Person S during the year 2
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During the current year, Finn and Claire, a married couple who use the cash method of accounting purchased a principal residence for $325,000. They paid $39,000 down and financed the remaining $286,000 of the purchase price with a 30-year mortgage. At the closing, they also paid $350 for an appraisal, $425 for a title search, and
2.5 points representing additional interest over the term of the loan. At the end of the year, Finn and Claire
received a statement from the mortgage company indicating that $11,500 of their total monthly payments made during the year represents interest and $1,100 is a reduction of the principal
What is the total amount
Finn and Claire
may deduct in the current year arising from the purchase and ownership of their home?
Finn and Claire may deduct
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Part 2
b. What is the treatment of the other items that are not deductible?
A.
The other closing costs are added to the market value of the home.
B.
The other closing…
Javier and Anita Sanchez purchased a home on January 1 of year 1 for $1,000,000 by paying $200,000 down and
borrowing the remaining $800,000 with a 6 percent loan secured by the home. The Sanchezes made interest-only
payments on the loan in years 1 and 2. (Leave no answer blank. Enter zero if applicable.)
c. Assume year 1 is 2021 and by the beginning of year 4, the Sanchezes have paid down the principal amount of the loan to $500,000.
In year 4, they borrow an additional $100,000 through a loan secured by the home in order to finish their basement. The new loan
carries a 7 percent interest rate and is termed a “home equity loan" by the lender. What amount of interest can the Sanchezes deduct
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Janet and James purchased their personal residence 15 years ago for $312,500. For the current year, they have an $78,125 first mortgage on their home, on which they paid $3,906 in interest. They also have a home equity loan to pay for the children's college tuition secured by their home with a balance throughout the year of $136,750. They paid interest on the home equity loan of $13,675 for the year. Calculate the amount of their deduction for interest paid on qualified residence acquisition debt and qualified home equity debt for the current year.
It an amount is zero, enter "0".
a.
Qualified residence acquisition debt interest
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b.
Qualified home equity debt interest
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Chapter 7 Solutions
MCGRAW-HILL'S TAX.OF INDIV.+BUS.2020
Ch. 7 - Describe how interest income and dividend income...Ch. 7 - What is the underlying policy rationale for the...Ch. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Why would taxpayers generally prefer the tax...Ch. 7 - In what ways are U.S. savings bonds treated more...Ch. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Compare and contrast the tax treatment of...Ch. 7 - What is the definition of a capital asset? Give...
Ch. 7 - Why does the tax law allow a taxpayer to defer...Ch. 7 - Prob. 12DQCh. 7 - What is the deciding factor in determining whether...Ch. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - What happens to capital losses that are not...Ch. 7 - Prob. 18DQCh. 7 - Prob. 19DQCh. 7 - What is a wash sale? What is the purpose of the...Ch. 7 - Prob. 21DQCh. 7 - Describe three basic tax planning strategies...Ch. 7 - Prob. 23DQCh. 7 - Prob. 24DQCh. 7 - Prob. 25DQCh. 7 - What limitations are placed on the deductibility...Ch. 7 - When taxpayers borrow money to buy municipal...Ch. 7 - What types of losses may potentially be...Ch. 7 - Prob. 29DQCh. 7 - Discuss the treatment of suspended passive losses...Ch. 7 - What tests are applied to determine if losses...Ch. 7 - Prob. 32DQCh. 7 - Prob. 33PCh. 7 - Dana intends to invest 30,000 in either a Treasury...Ch. 7 - Prob. 35PCh. 7 - Prob. 36PCh. 7 - Prob. 37PCh. 7 - Prob. 38PCh. 7 - Prob. 39PCh. 7 - Prob. 40PCh. 7 - Prob. 41PCh. 7 - Prob. 42PCh. 7 - Prob. 43PCh. 7 - Prob. 44PCh. 7 - Matt and Meg Comer are married and file a joint...Ch. 7 - Grayson (single) is in the 24 percent tax rate...Ch. 7 - Prob. 47PCh. 7 - During the current year, Ron and Anne sold the...Ch. 7 - In 2019, Tom and Amanda Jackson (married filing...Ch. 7 - For 2019, Sherri has a short-term loss of 2,500...Ch. 7 - Three years ago, Adrian purchased 100 shares of...Ch. 7 - Prob. 52PCh. 7 - Prob. 53PCh. 7 - Prob. 54PCh. 7 - Prob. 55PCh. 7 - Mickey and Jenny Porter file a joint tax return,...Ch. 7 - Prob. 57PCh. 7 - Prob. 58PCh. 7 - Prob. 59PCh. 7 - Rubio recently invested 20,000 (tax basis) in...Ch. 7 - Prob. 61PCh. 7 - Prob. 62PCh. 7 - Prob. 63CP
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