Amy Borrowed $25,000 for Her Business from a Local Bank

question 51

Multiple Choice

Amy borrowed $25,000 for her business from a local bank two years ago.To increase her deductions for 2013,she pays December interest of $400 and prepays January and February interest totaling $800 on December 30,2013.The maturity date of the note is November 30,2014.How much of the interest that she paid in December is deductible in 2013?
I.If she is a cash-basis taxpayer,Amy's interest deduction is $1,200.
II.If she is an accrual-basis taxpayer,Amy's interest deduction is $400.

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Compromising Style

A conflict resolution approach where involved parties make concessions to reach a mutually acceptable solution, balancing assertiveness and cooperation.

Conflict Resolution

The process of resolving a dispute or a conflict by meeting at least some of each side's needs and addressing their interests.

Early Use

Refers to the initial application or adoption of a technology, technique, or concept before it becomes widely adopted.

Conflict Management

The practice of identifying and handling conflicts in a sensible, fair, and efficient manner, often to minimize negative effects.