Toro Inc. has average gross receipts of $30 million annually. This year, Toro incurred $5 million of net business interest and has adjusted taxable income of $12 million. Toro's current deduction for business interest is:

Question

Quizplus · Accepted Answer

Toro's deduction for business interest is limited to 30% of its adjusted taxable income ($12 million) which is equal to $3.6 million. Therefore, the deduction for Toro’s business interest expense is $3.6 million.

Toro Inc Has Average Gross Receipts of $30 Million Annually