George Operates a Business That Generated Revenues of $60 Million

question 34

Multiple Choice

George operates a business that generated revenues of $60 million and allocable taxable income of $1.35 million. Included in the computation of allocable taxable income were deductible expenses of $245,000 of business interest and $255,000 of depreciation. What is the maximum business interest deduction that George will be eligible to claim this year?

• A) $405,000
• B) $555,000
• C) $1,605,000
• D) $328,500
• E) $255,000

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Definitions:

Overstated Costs

The reporting or recording of expenses that are higher than the actual or true costs incurred.

Inventory Costs

Inventory Costs encompass all expenses related to holding and managing inventory, including purchasing, storing, and handling costs.

Specific Identification

Specific identification is an inventory valuation method that tracks the cost of individual items for the purpose of determining cost of goods sold and ending inventory.

Accepted Methods

Refers to officially recognized or sanctioned techniques or procedures used in a particular field or discipline.