Jerry and Ann paid the following amounts during the current year: $\begin{array}{llcc}
\text { Interest on automobile loan} &\$1,500\
\text {Interest on bank loan (proceeds were used to purchase municipal bonds) } &\$5,000\
\text { Qualified home mortgage interest } &\$3,150\
\end{array}$
What is the maximum amount they can use as interest expense in calculating itemized deductions for the current year?
A)$6,500
B)$3,150
C)$4,650
D)$8,150
E)None of these

Question

Jerry and Ann paid the following amounts during the current year: $\begin{array}{llcc}
  \text {  Interest on automobile loan} &\$1,500\
 \text {Interest on bank loan (proceeds were used to purchase municipal bonds)  } &\$5,000\
 \text { Qualified home mortgage interest } &\$3,150\
\end{array}$
 What is the maximum amount they can use as interest expense in calculating itemized deductions for the current year?
A)$6,500
B)$3,150
C)$4,650
D)$8,150
E)None of these

Quizplus · Accepted Answer

The maximum amount they can use as interest expense in calculating itemized deductions for the current year is $3,150, which is the qualified home mortgage interest. Interest on automobile loans and bank loans for purchasing municipal bonds are not deductible as personal interest expenses.

Jerry and Ann Paid the Following Amounts During the Current