Bucksnort savings and loan for use in his business

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Reference no: EM131110958

On November 1 of year 0, Jaxon borrowed $50,000 from Bucksnort Savings and Loan for use in his business. In December, Jaxon paid interest of $4,500 relating to the 12-month period from November of year 0 through October of year 1.

a) How much interest, if any, can Jaxon deduct in year 0 if his business uses the cash method of accounting for tax purposes?

b) How much interest, if any, can Jaxon deduct in year 0 if his business uses the accrual method of accounting for tax purposes?

Reference no: EM131110958

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