In the Current Year, Tern, Inc

question 10

Multiple Choice

In the current year, Tern, Inc., a calendar year C corporation, has $9 million of adjusted taxable income, $300,000 of business interest income, zero floor plan financing interest, and $3.2 million of business interest expense. Tern has average gross receipts for the prior three-year period of $45 million. Which of the following statements is correct about the treatment of Tern's business interest expense?

• A) Current year deduction of $3.2 million.
• B) Current year deduction of $2,790,000, carryforward of $410,000.
• C) Current year deduction of $2,790,000, carryback of $410,000.
• D) Current year deduction of $3 million, carryforward of $200,000.
• E) Current year deduction of $3 million, carryback of $200,000.

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Definitions:

Lower-Order Need

Basic physiological or safety needs that must be satisfied before an individual can focus on higher-level psychological or self-fulfillment needs.

Frustration-Regression Principle

A concept suggesting that individuals facing persistent obstacles in achieving higher-order needs may regress to lower-level needs to find satisfaction.

Complacent

A state of self-satisfaction, often accompanied by a lack of awareness of potential dangers or deficiencies.

High-Performance Work Setting

An organizational environment designed to maximize employee performance and productivity through high engagement and empowerment.