Janine,a cash-basis taxpayer,borrowed $15,000 for her business from a local bank three years ago.To increase her deductions for 2017,she pays December interest of $150 and prepays January and February interest totaling $300.The maturity date of the note is November 30,2087.How much of the interest is deductible in 2017?

Question

Quizplus · Accepted Answer

As a cash-basis taxpayer, Janine can only deduct interest in the year it is actually paid. Therefore, only the December interest of $150 is deductible in 2017. Prepaid interest for January and February is not deductible until those months occur.

Janine,a Cash-Basis Taxpayer,borrowed $15,000 for Her Business from a Local