During 2016,Manuel and Gloria,who are married,incurred acquisition debt on their new residence of $1,150,000.On their joint tax return,what is the amount of their qualified acquisition debt on which they can deduct interest?
A)$1,050,000.
B)$1,000,000.
C)$1,150,000.
D)$900,000.

Question

Quizplus · Accepted Answer

According to IRS rules, for mortgages taken after October 13, 1987, taxpayers can deduct interest on mortgage debt up to $1,000,000 ($500,000 if married filing separately) that is used to acquire or improve their primary or secondary residence. Since Manuel and Gloria incurred acquisition debt of $1,150,000 on their new residence, they can deduct interest on a maximum of $1,000,000 of that debt. Therefore, option B is the correct answer.

During 2016,Manuel and Gloria,who Are Married,incurred Acquisition Debt on Their