Mr. Williams borrowed $30,000 which he then used to purchase bonds issued by the state...
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Accounting
Mr. Williams borrowed $30,000 which he then used to purchase bonds issued by the state of Ohio to fund construction of schools. The interest on these bonds is tax-exempt for federal tax purposes. This year, he paid $2,000 of interest on his loan and received $2,600 of interest income from the bonds.
The $2,000 of interest Mr. Williams paid on his loan is not deductible for federal tax purposes.
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