Beverly is the sole owner of Bev & Associates, an accrual basis corporation.In 2018, Bev & Associates has an unprofitable year and Beverly lends the corporation $50,000 to meet expenses.The corporation accrues interest expense of $5,000 on the loan from Beverly, but does not pay the interest to her in cash.How much of the $5,000 in accrued interest expense can Bev & Associates deduct on its 2018 corporate tax return? Explain.

Question

Beverly is the sole owner of Bev & Associates, an accrual basis corporation.In 2018, Bev & Associates has an unprofitable year and Beverly lends the corporation $50,000 to meet expenses.The corporation accrues interest expense of $5,000 on the loan from Beverly, but does not pay the interest to her in cash.​How much of the $5,000 in accrued interest expense can Bev & Associates deduct on its 2018 corporate tax return? Explain.

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The Answer of Beverly is the sole owner of Bev & Associates, an accrual basis corporation.In 2018, Bev & Associates has an unprofitable year and Beverly lends the corporation $50,000 to meet expenses.The corporation accrues interest expense of $5,000 on the loan from Beverly, but does not pay the interest to her in cash.​How much of the $5,000 in accrued interest expense can Bev & Associates deduct on its 2018 corporate tax return? Explain.

Beverly Is the Sole Owner of Bev & Associates, an Accrual