Harold, a Cash Basis Taxpayer, Borrows $65,000 for His Business

Harold, a cash basis taxpayer, borrows $65,000 for his business on a 2-year note from First City Bank on December 1, 2014. To close on the loan agreement, Harold is required to prepay interest of $4,800 on December 1. How much interest can Harold deduct in 2014?

A) $ - 0 -
B) $ 200
C) $ 400
D) $2,400
E) $4,800