Dwight purchases a new home costing $100,000 in the current year. He pays $15,000 down and borrows the remaining $85,000 by securing a mortgage on the home. He also pays $2,000 in closing costs and $1,700 in points to obtain the mortgage. He pays $7,500 in interest on the mortgage during the year.
Identify the tax issue(s) posed by the facts presented. Determine the possible tax consequences of each issue that you identify.