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Alekssandra [29.7K]
4 years ago
6

self-employed cash basis taxpayer, took out a loan to use in her business. The loan principal is to be repaid on November 30 of

Year 3. Jones prepaid the entire interest of $12,000 on December 1 of Year 1. What amount of interest was deductible on Jones' Year 2 income tax return?
Business
1 answer:
koban [17]4 years ago
3 0

Answer: $6,000

Explanation:

Interest is deductible from Income tax but when interest to be paid is more than 12 months, the interest would need to be evenly spread over the period that they apply to. The total interest is $12,000 but the repayment period is 2 years. This means that the interest would need to be spread out over the 24 months involved at a rate of;

= 12,000/24

= $500

In Year 2 therefore, the relevant amount that can be deducted will be for 12 months;

= 500 * 12

= $6,000

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Choose the best word or phrase from each drop-down menu. the federal reserve increases the money supply when it is trying to enc
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Because raising the money supply boosts the economy, the optimal sentence from the drop-down box is (i) or (a).

<h3>What happens when federal reserves increase?</h3>

Increasing the money supply has a number of consequences which are:

To boost the economy, the Federal government expands the money supply.

Customers use credit because interest rates are lower when the money supply is high.

The unemployment rate is reduced when the money supply is increased.

When the money supply is increased, the economy generally grows because people have more money to spend.

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Read 2 more answers
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The reserve requirement when the federal reserve banks sell $40 million in government securities to commercial banks is $8 million.

<h3>How to calculate the reserve requirement?</h3>

From the information given, the the federal reserve banks sell $40 million in government securities to commercial banks and the reserve ratio is 20 percent.

Therefore, the reserve requirement will be:

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Answer:

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Answer:

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The correct type of risk involved is compliance risk .

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