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.