Reference no: EM132674905
Problem - Dorothie paid the following amounts during the current year:
Interest on her home mortgage (pre-12/16/17) $9,250
Service charges on her checking account 48
Credit card interest 168
Auto loan interest 675
Interest from a home equity line of credit (HELOC) 2,300
Interest from a loan used to purchase stock 1,600
Credit investigation fee for loan 75
Dorothie's residence has a fair market value of $250,000. The mortgage is secured by the home at the time of purchase and has a balance of $180,000. Dorothie used the same home to secure her HELOC with a balance of $50,000. Dorothie used the proceeds of her HELOC to pay for college and to buy a new car. Dorothie has $1,000 of net investment income. Compute Dorothie's interest deduction in the following scenarios:
a. Use the Interest You Paid section of Schedule A on Page 5-23 to calculate Dorothie's interest deduction for 2019.
b. Same as part a, and Dorothie used the HELOC proceeds to add a new bedroom to her home.
c. Same as part a, but Dorothie's home is valued at $1.2 million and her mortgage balance is $900,000.