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To finance the purchase a new piece of equipment for his business Allan borrowed money from his bank paying 5% interest. Before he has paid
To finance the purchase a new piece of equipment for his business Allan borrowed money from his bank paying 5% interest.
Before he has paid off the loan he sells the business and disposes of the equipment. There is insufficient sales proceeds to completely pay off the loan and he still has to pay the interest on the unpaid balance. He cannot claim the interest payments a deduction because his business has ceased.
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