On December 1, 2019, Delilah borrows $2,000 from her credit union to use in her business. Under the terms of the contract, Delilah actually receives $1,940 but is required to repay $2,000 in three months.a.What amount may Delilah deduct as interest expense in 2019 and in 2020 if she is a cash-basis taxpayer?b.What amount may Delilah deduct as interest expense in 2019 and in 2020 if she is an accrual-basis taxpayer?
What will be an ideal response?
| a. | A cash-basis taxpayer may deduct the full amount, $60, when the loan is repaid in 2020 but |
| b. | An accrual-basis taxpayer may deduct 1/3 × $60 or $20 in 2019 and $40 in 2020. |
You might also like to view...
Alternative media is used almost exclusively in the United States
Indicate whether the statement is true or false
Which of the following is true of a certificate of deposit?
A. It is sold by large corporations to raise short-term funds. B. ?A fall in its demand will lead to an increase in the price of the security and a fall in its yield to maturity. C. Higher the term to maturity of a certificate of deposit, higher the yield to maturity. D. ?It is not a liquid security and cannot be transferred from one party to another.
A unique key can serve as a(n) ______.
Fill in the blank(s) with the appropriate word(s).
A class action lawsuit is certified only if there is commonality among the plaintiffs' claims.
Answer the following statement true (T) or false (F)