Margaret lindley paid $15,000 of interest on her $300,000 acquisition debt for her home (fair market value of $500,000), $4,000 of interest on her $30,000 home-equity loan, $1,000 of credit card interest, and $3,000 of margin interest for the purchase of stock. assume that margaret lindley has $10,000 of interest income this year and no investment expenses. how much of the interest expense may she deduct this year?

The deductible interest expense is $22,000.

Explanation:

Margaret Lindley paid $15,000 of interest on her $300,000 acquisition debt for her home (fair market value of $500,000).

She paid $4,000 of interest on her $30,000 home-equity loan.  

She also paid $1,000 of credit card interest and $3,000 of margin interest for the purchase of stock.

Margaret Lindley has $10,000 of interest income this year and no investment expenses.  

The deductible interest expense

= $15,000 + $4,000 + $3,000

= $22,000

The interest on credit cards is not deductible as it is a personal interest.