# Explanation c 30270 because the sanchezes had no

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Explanation c. \$30,270. Because the Sanchezes had no other itemized deductions, their interest expense only produces a benefit to them to the extent that it exceeds the standard deduction, calculated as follows: Description Amount Explanation (1)Before-tax interest expense \$37,800 \$630,000 × 6%. All deductible. (2) Standard deduction 12,700 (3)Interest in excess of standard deduction\$25,100 (1) − (2) (4) Marginal tax rate × 30 (5)Tax savings from interest expense \$7,530 (3) × (4) After-tax cost of interest expense \$ 30,270 (1) − (5) MFJ %
Question 18. In year 1, Peter and Shaline Johnsen moved into a home in a new subdivision. Theirs was one of the first homes in the subdivision. In year 1, they paid \$3,900 in real property taxes to the state government, \$990 to the developer of the subdivision for an assessment to pay for the sidewalks, and \$1,090 for real property taxes on land they hold as an investment. What amount of property taxes are the Johnsens allowed to deduct assuming their itemized deductions exceed the standard deduction amount before considering any property tax deductions?
Question 19. Dillon rented his personal residence at Lake Tahoe for 14 days while he was vacationing in Ireland. He resided in the home for the remainder of the year. Rental income from the property was \$6,000. Expenses associated with use of the home for the entire year were as follows: Real property taxes \$ 2,950 Mortgage interest 11,875 Repairs 1,275 Insurance 1,450 Utilities 4,800 Depreciation 12,000 a. What effect does the rental have on Dillon’s AGI? Explanation
Question 20. Dillon rented his personal residence at Lake Tahoe for 14 days while he was vacationing in Ireland. He resided in the home for the remainder of the year. Rental income from the property was \$6,000. Expenses associated with use of the home for the entire year were as follows: Real property taxes \$ 2,950 Mortgage interest 11,875 Repairs 1,275 Insurance 1,450 Utilities 4,800 Depreciation 12,000 b. What effect does the rental have on Dillon’s itemized deductions? Explanation