The IRS Deductions Blog

Posts Tagged ‘interest expense’

Question: One disadvantage of financing with bonds versus stock would be that?

One disadvantage of financing with bonds versus stock would be that:

1. a. Bonds create a legal liability to repay the principal of the loan and interest
2. b. Interest expense of a bond issue is tax deductible
3. c. Bonds do not increase the number of owners of a business
4. d. None of these

Answer: Okay I am revising this answer. It is definitely A.

It is absolutely not B or C as those are both advantages, not disadvantages. I don’t like this question because it says “versus stock” and because of that, the question is asked like its comparing financing with bonds versus financing with stock, and this “disadvantage” of answer A is outweighed by the disadvantges of financing with stock. I would argue this point with my professor if I saw this on a test. Just the “versus stock” part.

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Question: Is home equity mortgage interest deductible for home office expenses?

The money was used to pay off credit cards. I am still paying on the home equity loan. If I do a home office deduction, which I qualify for in every way, can I use the home equity loan interest as a deductible expense?

Answer: Be careful with that, its not really worth to pursue it. You can get caught and then have problems with IRS.

The amount you talk about is so small, you shouldn’t bother really.

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