Barry and Larry, Who Are Brothers, Are Equal Owners in Chickadee

question 46

Multiple Choice

Barry and Larry, who are brothers, are equal owners in Chickadee Corporation. On July 1, 2017, each loans the corporation $10,000 at an annual interest rate of 10%. Both shareholders are on the cash method of accounting, while Chickadee Corporation is on the accrual method. All parties use the calendar year for tax purposes. On June 30, 2018, Chickadee repays the loans of $20,000 together with the specified interest of $2,000. How much of the interest can Chickadee Corporation deduct in 2017?

• A)$0
• B)$500
• C)$1,000
• D)$2,000
• E)None of the above

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Definitions:

Work Site

The physical location where work is performed, often referring specifically to construction, manufacturing, or other project-specific locations.

Community of Interest

A collective of individuals or organizations that share a common interest or goal, often leading to collaboration or shared initiatives.

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Groups of employees with a clear community of interests who are represented by a single labor union in collective bargaining.

Workplace

An environment or venue where employees perform their occupational duties, potentially including virtual spaces.