Ardennes Inc. is a calendar year, accrual method, C-Corporation that operates a lumber mill. In 2021, Ardennes, Inc. reported taxable income before any limitations of $1,100,000. Ardennes Inc.’s had average annual gross receipts over the previous three tax years of $30,000,000. The following items of income and deductions are included in the above computation of taxable income before any limitations:

• $800,000 business interest expense
• $550,000 depreciation
• $25,000 business interest income
• $400,000 research and development expenses
• $325,000 executive compensation

Given the information above, how much interest expense can Ardennes Inc. deduct in 2021?

How would your answer change if Ardennes Inc. had average annual gross receipts of $23,000,000 over the previous three years?