Barry and Larry,who Are Brothers,are Equal Owners in Chickadee Corporation

question 55

Multiple Choice

Barry and Larry,who are brothers,are equal owners in Chickadee Corporation.On July 1,2015,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 30,2016,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 2015?

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

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Definitions:

Seven Years' War

An international war waged from 1756 to 1763 that engaged the majority of the era's major powers, impacting regions including Europe, North America, Central America, the West African coast, India, and the Philippines.

Admiralty Courts

Courts specializing in cases involving maritime law, including shipping, navigation, waters, and insurance related to sea travel and commerce.

Seven Years' War

A global conflict fought between 1756 and 1763 involving most of the great powers of the time, affecting Europe, North America, Central America, the West African coast, India, and the Philippines.

No Taxation Without Representation

A slogan originating during the 1700s that summarized a primary grievance of the American colonists in the Thirteen Colonies, which was one of the major causes of the American Revolution.