1. Lebron Taylor purchased a home on July 1, year 1 for $500,000. Lebron paid for the...
Question:
1. Lebron Taylor purchased a home on July 1, year 1 for $500,000. Lebron paid for the entire purchase price with cash. In July of year 1, Lebron needed additional cash for purposes unrelated to his home so he took out a home equity loan for $150,000. During year 2, he made interest only payments of $4,500 on the loan.
What amount of the $4,500 interest expense can Lebron deduct in year 2?
2. Janey purchased machinery on April 8th of the current year. The relevant costs for the year are as follows: machinery for $10,000, $800 shipping, $50 for delivery insurance, $500 for installation, $750 for sales tax, $150 for the annual tune up, and $200 of property taxes (an annual tax on business property).
What is Janey's tax basis for the machinery?
Accounting
ISBN: 978-1337899451
27th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac