A cash-basis lawyer purchases an office building to use in her legal practice.To acquire the mortgage,the taxpayer must pay $5,000 in points.The taxpayer will deduct the points in the year paid.

Question

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Under cash-basis accounting, points paid on a mortgage for a business property must be capitalized and amortized over the life of the loan, not deducted in the year paid.

A Cash-Basis Lawyer Purchases an Office Building to Use in Her