This year Randy paid $29,800 of interest on his residence. (Randy borrowed $474,000 to buy his residence, and it is currently worth $524,000.) Randy also paid $3,100 of interest on his car loan and $5,100 of margin interest to his stockbroker (investment interest expense). How much of this interest expense can Randy deduct as an itemized deduction under the following circumstances

Randy can deduct $33,900 interest expense as an itemized deduction.

Explanation:

a) Data and Calculations:

Mortgage interest on residence = $29,800

Mortgage loan = $74,000

Current price of house = $524,000

Car loan interest = $3,100

Investment (margin) interest = $4,100

Deductible interest expenses:

Mortgage interest on residence = $29,800

Investment (margin) interest =            4,100

Total deductible interest =             $33,900

b) The car loan interest that Randy incurred is not tax-deductible unless the car is used for his business.  Otherwise, only the portion used for business is deductible.  It is assumed that the car loan interest was incurred for private use and not business use.  Therefore, it is not deductible.

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

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