Determine the interest expense is deductible, Cost Accounting

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Assume the same facts as in 1A above, except that the interest payment checks were placed on the shareholders' office on December 31, 2012. However, the shareholders are not in the office that day due to the New Year celebrations. Exxon is an accrual method taxpayer and the 3 shareholders are cash basis taxpayers: (Hint ------>Constructive Receipt Doctrine)

a)      How much of the $70,000 interest expense is deductible by Exxon for the tax year 2012?

b)      How much of the $70,000 interest income is recognized by Pat, Dan, and Nancy for 2012?

 


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