Which of the following interest expenses incurred by Amanda is treated as personal interest expense and, therefore, not deductible as an itemized deduction?
A. Interest expense on personal credit cards
B. Bonds purchased with accrued interest
C. Interest on a home mortgage acquired in 1998
D. Interest incurred by a partnership in which Amanda is a limited partner
i think its D
B. How can one deduct accrued interest that will be paid back to you at the next distribution?
To determine which of Amanda's interest expenses is treated as personal interest expense and not deductible as an itemized deduction, we need to understand the rules regarding deductibility of interest expenses.
A. Interest expense on personal credit cards: Interest paid on personal credit cards is generally considered personal interest expense and is not deductible as an itemized deduction.
B. Bonds purchased with accrued interest: When bonds are purchased with accrued interest, the accrued interest is treated as interest income for the buyer and is taxable. However, the interest expense incurred on these bonds is generally deductible as an itemized deduction. Therefore, this expense is not considered as personal interest expense.
C. Interest on a home mortgage acquired in 1998: Home mortgage interest is generally deductible as an itemized deduction, subject to certain limitations. If Amanda's home mortgage interest meets the qualifying criteria, this interest expense would be deductible and not considered personal interest expense.
D. Interest incurred by a partnership in which Amanda is a limited partner: Interest incurred by a partnership is typically considered business interest expense and is deductible by the partnership. As a limited partner, Amanda may be allocated a share of the partnership's expenses, including interest expenses. This interest expense would not be considered personal interest expense.
Considering the information above, option A (Interest expense on personal credit cards) is correct. Interest expense on personal credit cards is treated as personal interest expense and is therefore not deductible as an itemized deduction.