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On November 1, 2018, Milton Consultants Inc

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Essay

On November 1, 2018, Milton Consultants Inc., enters into a 2-year lease agreement for the use of a photocopier. The lease agreement requires Milton Consultants to pay a fixed fee of $4,800 on November 1 and one cent for each copy made on a monthly basis. Milton made the $4,800 payment on November 1, 2018. It paid $450 on December 10, 2018 for copies made in November and $560 on January 12, 2019 for copies made in December. Milton Consultants Inc., uses the cash basis of accounting. Explain, in terms of the income tax concepts, the amount of the deduction for the use of the copier that Milton can take in 2018.


Definitions:

Principal

The original sum of money borrowed in a loan, or the amount of the investment on which interest is calculated.

Promissory Note

A Promissory Note is a financial document in which one party promises to pay a specified sum of money to another party at a predetermined date or on demand.

360-Day Year

A simplified method for calculating interest based on a year of 360 days instead of the actual 365 or 366 days.

Promissory Note

A financial document in which one party promises to pay another party a specified sum of money at a specified date or on demand.

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