Question

Which of the following is a true statement?

A. Taxpayers may only deduct interest on up to $1,500,000 of acquisition indebtedness.

B. Taxpayers may deduct interest on up to $1,000,000 of home-equity debt.

C. The deduction for investment interest expense is not subject to limitation.

D. Interest on home-equity debt up to $100,000 is deductible, even if the loan proceeds are used to buy a new car.

E. None of these is true.

Answer 1

The correct statement is: Interest on home-equity debt up to $100,000 is deductible, even if the loan proceeds are used to buy a new car.

Step-by-step explanation:

The correct statement is: D. Interest on home-equity debt up to $100,000 is deductible, even if the loan proceeds are used to buy a new car.

Taxpayers can deduct interest on home-equity debt up to $100,000, regardless of how the loan proceeds are used. This means that even if the loan is used to buy a new car, the interest can still be deducted. However, it is important to note that the loan amount cannot exceed the fair market value of the home.