Steve purchased a newsagency business on 1 July nine years ago for $180 000 by taking out an interest only loan for $180 000 with the Queensland Bank at 9% interest for a term of ten years. Steve paid loan establishment fees and stamp duty in setting up the loan of $1500. Unfortunately, the business consistently ran at a loss and on 1 July of the current tax year, Steve sold the business for $120 000 and used the proceeds to reduce the loan balance to $60 000. Referring to the above facts about Steve, which one of the following statements about his taxation situation is most correct?

Select one: 1. Interest on the business loan is deductible while the business is operating, but stops being deductible from 1 July of the current tax year when the business is sold. 2. Pursuant to the decision in Steele v FCT 99 ATC 4242, none of the interest expense incurred on the business loan is deductible to Steve as it relates to the purchase of a capital asset. 3. Pursuant to the decision in FCT v Brown 99 ATC 4600, Steve will continue to be entitled to a deduction for the interest expense on the remaining loan after the sale of the business as the nexus between the carrying on of the business and incurring the interest has not been broken. 4. Steve was entitled to claim an immediate deduction of $1500 for the establishment fees and stamp duty on the business loan in the tax year when the loan was taken out. 5. Steve will be entitled to a deduction of $150 in the current tax year in relation to the loan establishment fees and stamp duty pursuant to section 25-25.