Question
On November 1 of this year, Jaxon borrowed $47,000 from Bucksnort Savings and Loan for use in his business. In December, Jaxon paid interest of
On November 1 of this year, Jaxon borrowed $47,000 from Bucksnort Savings and Loan for use in his business. In December, Jaxon paid interest of $4,230 relating to the 12-month period from November of this year through October of next year.
Note: Do not round intermediate calculations. Assume a calendar year end.
a. How much interest, if any, can Jaxon deduct this year if his business uses the cash method of accounting for tax purposes?
b. How much interest, if any, can Jaxon deduct this year if his business uses the accrual method of accounting for tax purposes?
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Farmers Irs Audit Techniques Guide
Authors: Internal Revenue Service
1st Edition
1304134237, 978-1304134233
