On January 1 of year 1, Arthur and Aretha Franklin purchased a home for $1.86...
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Accounting
On January 1 of year 1, Arthur and Aretha Franklin purchased a home for $1.86 million by paying 260,000 down and borrowing the remaining $1.60 million with a 5 percent loan secured by the home. The Franklins paid interest only on the loan for year 1 and year 2 (unless stated otherwise). (Enter your answers in dollars and not in millions of dollars. Do not round intermediate calculations. Leave no answer blank. Enter zero if applicable.) Problem 14-48 Part c c. Assume that year 1 is 2019 and that in year 2, the Franklins pay off the entire loan but at the beginning of year 3, they borrow $330,000 secured by the home at a 5 percent rate. They make interest-only payments on the loan during the year and they use the loan proceeds for purposes unrelated to the home. What amount of interest expense may the Franklins deduct in year 3 on this loan?
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