iScope Incorporated 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?
A)Permanent; favorable.
B)Permanent; unfavorable.
C)Temporary; favorable.
D)Temporary; unfavorable.

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 Incorporated Paid $3,000 in Interest on a Loan It