T borrows $10,000 from his bank on April 1, primarily for expenses involved in starting a lawn-care business.T deposits the $10,000 in a money-market account with which he can write checks.T leaves the $10,000 untouched for the remainder of the year.The interest expense on T's loan will be classified as
A)Nondeductible interest
B)Qualified residence interest
C)Tax deferred interest expense
D)Investment interest expense
E)Personal interest expense

Question

Quizplus · Accepted Answer

The interest expense on the loan is classified as investment interest expense because the borrowed funds were deposited into a money-market account, which is considered an investment vehicle.

T Borrows $10,000 from His Bank on April 1, Primarily