Assume that your aunt sold her house on January 1 and that she took a mortgage in the amount of $10,000 as part of the payment. The mortgage has a quoted (or simple) interest rate of 10 percent, but it calls for payments every six months, beginning on June 30, and the mortgage is to be amortized over 10 years. Now, one year later, your aunt must file a Form 1099 with the IRS and with the person who bought the house, informing them of the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) To the closest dollar, what is the total amount of interest that was paid during the first year?

Assume that your aunt sold her house on January 1 and that she took a mortgage in the amount of $10,000 as part of the payment. The mortgage has a quoted (or simple) interest rate of 10 percent, but it calls for payments every six months, beginning on June 30, and the mortgage is to be amortized over 10 years. Now, one year later, your aunt must file a Form 1099 with the IRS and with the person who bought the house, informing them of the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) To the closest dollar, what is the total amount of interest that was paid during the first year?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 37P

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