Which of the following is a true statement?
A)For purposes of the deduction for educational interest,expenses do not include expenses for room,board and travel.
B)For purposes of the deduction for educational interest,qualified education expenses are those paid for the education of the taxpayer,the taxpayer's spouse,or a taxpayer's dependent.
C)The maximum deduction for interest expense on qualified education loans is $6,000.
D)A penalty paid for prematurely withdrawing a certificate of deposit or similar deposit is deductible from AGI as an investment expense.
E)All of the choices are false.

Question

Which of the following is a true statement?
A)For purposes of the deduction for educational interest,expenses do not include expenses for room,board and travel.
B)For purposes of the deduction for educational interest,qualified education expenses are those paid for the education of the taxpayer,the taxpayer's spouse,or a taxpayer's dependent.
C)The maximum deduction for interest expense on qualified education loans is $6,000.
D)A penalty paid for prematurely withdrawing a certificate of deposit or similar deposit is deductible from AGI as an investment expense.
E)All of the choices are false.

Quizplus · Accepted Answer

This is a true statement according to the IRS guidelines for the deduction of educational interest. The expenses must be for the education of the taxpayer, spouse or a dependent. Room, board, and travel expenses are not included as qualified education expenses. The maximum deduction for interest expense on qualified education loans is $2,500, not $6,000. Penalty paid for prematurely withdrawing a certificate of deposit is not deductible as an investment expense, it is considered as an adjustment to interest income. Therefore, options A, C, and D are false.

Which of the Following Is a True Statement