Rodney,the Sole Shareholder of a Calendar Year,accrual Basis C Corporation,loaned

question 81

Multiple Choice

Rodney,the sole shareholder of a calendar year,accrual basis C corporation,loaned the corporation a substantial amount of money on January 1,2008.The corporation accrued $45,000 of interest expense on the loan on December 31,2008.It pays the interest to Rodney,a cash basis taxpayer,on April 1,2009.Under these facts:

• A)The corporation will be allowed to deduct the interest expense in 2008 and Rodney will be required to report the interest income in 2009.
• B)The corporation will be allowed to deduct the interest expense in 2009 and Rodney will be required to report the interest income in 2009.
• C)The corporation will be allowed to deduct the interest expense in 2009 and Rodney will be required to report the interest income in 2008.
• D)The corporation will be allowed to deduct the interest expense in 2008 and Rodney will be required to report the interest income in 2008.
• E)None of the above.

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Definitions:

Coefficient Of Determination

The coefficient of determination, denoted as R², measures the proportion of the variance in the dependent variable that is predictable from the independent variables in a regression model.

Coefficient Of Correlation

A mathematical metric that determines both the magnitude and trend of the association between two factors.

Coefficient Of Correlation

A measure that determines the strength and direction of a linear relationship between two variables, typically denoted as 'r'.

Linear Relationship

A type of relationship between two variables where the change in one variable is directly proportional to the change in the other variable.