When an accrual basis taxpayer finances the construction of its building by borrowing, the interest is added to the cost of the building.

Question

Quizplus · Accepted Answer

Interest on borrowed funds used to finance the construction of a building is considered a cost of acquiring that building, and therefore can be added to the cost of the building for tax purposes. This applies to taxpayers who use the accrual method of accounting for tax purposes.

When an Accrual Basis Taxpayer Finances the Construction of Its