Deductible Interest Expenses for Randy

What are the circumstances of Randy's interest expenses and how much can he deduct? a. $31,850 b. $29,650

When it comes to deducting interest expenses, Randy's situation plays a crucial role in determining how much of his interest expenses he can deduct. Let's break down the two scenarios provided:

Scenario A: Randy received $2,200 of interest this year and no other investment income or expenses. His AGI is $75,000.

In this scenario, Randy's deductible interest expenses would be calculated as follows:

Interest on his residence: $29,650 (deductible)

Interest on car loan (non-deductible): $0

Margin Interest to his stockbroker (limited to $2,200): $2,200

Total deductible: $31,850

Scenario B: Randy had no investment income this year, and his AGI is $75,000.

For this scenario, Randy can only deduct the interest on his home loan, which amounts to $29,650. Since he had no investment income, there are no additional deductions he can make aside from the interest on his residence.

It's important for Randy to consider his individual financial circumstances and consult with a tax professional to maximize his deductions and ensure compliance with tax laws.

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