# Matthew borrows \$250,000 to invest in bonds

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1. Matthew borrows \$250,000 to invest in bonds. During 2012, his interest on the loan is \$30,000. Matthew’s interest income from the bonds is \$10,000. This is Matthew’s only investment income.
A. Calculate Matthew’s itemized deduction for investment interest for the year
B. Is Matthew entitled to a deduction in future years? Explain.

2. Helen paid the following amounts of interest during the 2012 tax year:
Mortgage interest on Dallas residence (loan balance \$50,000) \$2,025
Automobile loan interest (personal use only) \$440
Mortgage interest on Vail residence (loan balance \$50,000) \$3,050
Visa and Mastercard Interest \$165
Calculate the amount of Helen’s itemized deduction for interest (after limitations) for 2012.

3. Jerry made the following contributions during 2012:
His synagogue (by check) \$680
The Democratic Party (by check) \$180
The American Red Cross (by check) \$150
His lodge for a holiday party \$100
In addition, Jerry donated used furniture to the Salvation Army costing \$2,000 with a fair market value of \$400. Assuming Jerry has AGI of \$45,000, has the necessary written acknowledgments, and itemizes deductions, complete the Gifts to Charity section of Schedule A to show Jerry’s deduction for 2012.

4. Richard donates publicly traded Gold Company stock with a basis of \$1,000 and a fair market value of \$15,000 to the college he attended, which is considered a public charity. Richard has owned the shares for 10 years. How is this contribution treated on Richard’s tax return?

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