A corporation issues debt with a maturity value of $1,000,000 for proceeds of $900,000. The debt matures in 10 years and pays annual interest at a rate of 10 percent. Which of the following statements is correct?
A)The corporation will be able to deduct interest of $110,000 in each of the years 1 through 10.
B)The corporation will be able to deduct interest of $100,000 in each of the years 1 through 10 and will have a fully deductible loss of $100,000 in year 10.
C)The corporation will be able to deduct interest of $100,000 in each of the years 1 through 10 and will have a capital loss in year 10 of $100,000, only one-half of which will be deductible.
D)The corporation will be able to deduct interest of $90,000 in each of the years 1 through 10.

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The Answer of A corporation issues debt with a maturity value of $1,000,000 for proceeds of $900,000. The debt matures in 10 years and pays annual interest at a rate of 10 percent. Which of the following statements is correct?
A)The corporation will be able to deduct interest of $110,000 in each of the years 1 through 10.
B)The corporation will be able to deduct interest of $100,000 in each of the years 1 through 10 and will have a fully deductible loss of $100,000 in year 10.
C)The corporation will be able to deduct interest of $100,000 in each of the years 1 through 10 and will have a capital loss in year 10 of $100,000, only one-half of which will be deductible.
D)The corporation will be able to deduct interest of $90,000 in each of the years 1 through 10.

A Corporation Issues Debt with a Maturity Value of $1,000,000