Jarret owns city of Savannah bonds with an adjusted basis of $100000. During the year, he receives interest payments of $3000. Jjarret partially financed the purchase of the bonds by borrowing $80000 at 5% interest. Jarret's interest payments on the loan this year are $4000,and his principal payments are $900.
a. Should Jarret report any interest income this year?
b. Can Jarret deduct any interest expense this year?