Janine,a cash-basis taxpayer,borrowed $15,000 for her business from a local bank three years ago.To increase her deductions for 2016,she pays December interest of $150 and prepays January and February interest totaling $300.The maturity date of the note is November 30,2017.How much of the interest is deductible in 2016?

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As a cash-basis taxpayer, Janine can only deduct interest in the year it is actually paid. Therefore, she can deduct the $150 interest paid for December in 2016. The prepaid interest for January and February is not deductible in 2016.

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