Key to interest deductions is proper tracing of borrowed funds, according to new Regs

Article Abstract:

The Tax Reform Act of 1986 has eliminated or reduced allowable deductions for interest on many types of loans. Taxpayers need to keep careful track of how borrowed funds are used. The approach used by the government to determine how funds are spent is described. Examples of interest deductions and tax planning suggestions for allocating interest expenditures are given.

Accounting and auditing, Tax deductions, Loans

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New rule for identifying interest as being on qualified mortgage indebtedness

Article Abstract:

New guidelines for determining when interest qualifies as deductible acquisition indebtedness have been issued by the government. Interest may qualify under an objective test called the 90-day rule. In order to qualify under the acquisition indebtedness rules, acquisition indebtedness must be incurred in acquiring, building, or improving a qualified residence.

Mortgages

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