The petitioner bought a home for $300,000 and later refinanced it for $600,000 and then even later had the loan modified. As a result of the modification, the interest rate was reduced. Before the modification, the loan balance was $579,275 and after the modification it was $623,953. The increased loan balance included $30,273 of past due interest that was added to principal. The lender issued Form 1098 reflecting $9,253 of mortgage interest paid during the year. The petitioner deducted $39,536 of interest for the year and IRS denied the additional $30,273 deduction because it had not yet been paid. The court upheld the IRS position. Copeland v. Comr., T.C. Memo. 2014-226.