Clyde operates a sole proprietorship using the cash method. This year, Clyde made the following expenditures: $480 to U.S. Bank for 12 months of interest accruing on a business loan from September 1 of this year through August 31of next year even though only $160 of interest accrued this year.
$600 for 12 months of property insurance beginning on July 1 of this year.
What is the maximum amount Clyde can deduct this year?

Question

Quizplus · Accepted Answer

Clyde can deduct $160 for the interest that actually accrued this year and $600 for the 12 months of property insurance, totaling $760.

Clyde Operates a Sole Proprietorship Using the Cash Method