What amount can Molly deduct for mortgage interest on Schedule E for her rental property?

In determining the correct amount Molly can deduct for mortgage interest on Schedule E for her rental property, it's essential to understand how mortgage interest deductions work in relation to rental income.

Molly can deduct the entire amount of mortgage interest she pays on a rental property, as it is considered an expense directly related to the operation of the business of renting out real estate. If her mortgage interest paid is $15,000, this amount is fully deductible as a necessary and ordinary expense associated with the rental activity. This aligns with IRS guidelines, which specify that mortgage interest on properties held for income-producing activities can be deducted from rental income on Schedule E.

Other choices reflect lesser amounts that could only be applicable under different circumstances, such as having no mortgage interest or significantly lesser interest payments. However, since it is specified that she has incurred $15,000 in mortgage interest, that entire amount is deductible as it directly relates to her rental operations. Thus, Molly can deduct $15,000 for mortgage interest on Schedule E for her rental property.