Christopher,a cash basis taxpayer,borrows $1,000 from ABC Bank by issuing a 3-month note on December 1,2014.Christopher receives $940 but must repay $1,000 on the due date.The amount of interest expense deductible in 2014 is $20.

Question

Quizplus · Accepted Answer

A cash basis taxpayer can only deduct interest expense when it is actually paid. Since Christopher did not pay any interest in 2014, he cannot deduct it in that year.

Christopher,a Cash Basis Taxpayer,borrows $1,000 from ABC Bank by Issuing