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How much of the interest can magpie corporation deduct

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Question - Malcolm owns 60% and Buddy owns 40% of Magpie Corporation. On July 1, 2014, each lends the corporation $53,200 at an annual interest rate of 14%. Malcolm and Buddy are not related. Both shareholders are on the cash method of accounting, and Magpie Corporation is on the accrual method. All parties use the calendar year for tax purposes. On June 30, 2015, Magpie repays the loans of $53,200 together with the specified interest.

a. How much of the interest can Magpie Corporation deduct in 2014? In 2015? Round your answers to the nearest whole dollar.

Reference no: EM132067684

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