Asked by Abder-rahmane Cisse on Jun 03, 2024
Verified
The interest paid on a loan used to acquire municipal bonds is deductible as investment interest expense.
Municipal Bonds
Bonds issued by local municipalities to finance public projects such as schools and highways; interest income is often exempt from federal income taxes.
Investment Interest Expense
The cost of interest on money borrowed to purchase taxable investments, which can sometimes be deducted from income for tax purposes.
- Determine the regulations related to the deduction of mortgage and investment interest.
Verified Answer
SA
Sarah AccettaJun 06, 2024
Final Answer :
False
Explanation :
Interest paid on a loan to acquire municipal bonds is not deductible because the interest income from municipal bonds is generally exempt from federal income tax.
Learning Objectives
- Determine the regulations related to the deduction of mortgage and investment interest.
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