In becker MC CPA-02243, it states that the interest incurred on loan to carry US obligation is treated same for both book purposes and tax return purposes. But isnt it it should be non-deductible in tax purpose but expense in book purpose??

In becker MC CPA-06518, Roberk exchanges land with a basis of $10,000 and a FMV of $100,000 for 60 shares of stock, why he should recognize $90,000 of income as i think this exchange has not involved boot exchange, the gain should be realized gain only??

Many thanks!

Interest incurred on investments is deductible, but it cannot exceed the income reported for tax purposes. Interest income on US obligations is taxable so the interest expense is deductible.  However if the interest incurred was for a loan to carry state or municipal investments the income is not taxed so the interest is not deductible.

The rules for exchanges involving boot are for "like-kind" assets. Since the land and the stock are not the same type the exchange rules do not apply and the land has to be written up to FMV. The problem does not state the percentage of ownership he gets with the 60 shares, but I have to assume he does not meet the criteria to contribute the land tax free.

my passmaster expired so i can not see the actual question but i'll do my best to answer these

question 1: you are thinking about interest expense on loans to carry "MUNI BONDS". if a question gives you the book income, you have to add interest expense on loans to carry muni bonds to get taxable income. i think the question is talking about interest expense on loans to carry "US T-BONDS" (US obligations) which are deductible for books and taxes, no adjustments are made

question 2: i'm assuming robert has less than 80% control, so when a shareholder give property to a corp for its stock it is a taxable event. you have to treat it like you sold property at FMV to the corp for cash

let me know if that helps. if not please put the entire question and answer explanations in so i can see

thanks a lot, but i m always confused whether US obligation bond falls within category 1 below, can someone list out the example for each below so that i can make it clear?

1. State and local government bonds/ obligations (as far as i know muni bond is, US obligation is not?)

2.  Bonds of US Possession (e.g. ?)

3. Series EE Bond (i think only one)