Homework Answers
Part A
|
Deduction for business interest |
$1617000 |
As average annual gross receipts for the prior three-year period exceeds $25 million, it is not a small business and thus deduction for business interest will be calculated in the following manner.
[$147,000 (business interest income) + $1,470,000 (30% × $4,900,000 of adjusted taxable income)] = $1617000
Part B
|
Deduction for business interest |
$1960000 |
As average annual gross receipts for the prior three-year period does not exceed $25 million, it is a small business and thus full interest expense is allowed as a deduction.
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