iScope Inc. paid $3,000 in interest on a loan it used to purchase municipal bonds. What is the nature of the book-tax difference relating to this expense?

Name: iScope Inc. paid $3,000 in interest on a loan it used to purchase municipal bonds. What is the nature of the book-tax difference relating to this expense?
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Question

Quizplus · Accepted Answer

Interest expense on a loan used to purchase tax-exempt municipal bonds is not deductible for tax purposes, creating a permanent, unfavorable book-tax difference.

IScope Inc