Federal Tax Research 10th Edition by Steven Gill, Gerald Whittenburg, Roby Sawyers, Debra Sanders, William Raabe

Exercise 50

Lila personally bought three insurance policies on her life. She borrowed $28,500 and prepaid the first five years' worth of annual payments on a whole life policy. In addition, she borrowed $4,200 and paid one of the two required premiums on a group term policy through her professional organization. Finally, she borrowed $3,000 and bought utilities mutual fund shares. The principal and interest of the fund's assets are to be appropriated in a timely fashion by Lila to make payments on a five-premium endowment contract. Interest charges for the three loans were $2,500, $420, and $310, respectively. How much of this interest can Lila deduct