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19 October, 02:18

George operates a business that generated revenues of $51 million and allocable taxable income of $1.26 million. Included in the computation of allocable taxable income were deductible expenses of $240,500 of business interest and $250,500 of depreciation. What is the maximum business interest deduction that George will be eligible to claim this year

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  1. 19 October, 02:36
    0
    The Maximum business interest deduction to be claim by George this year is $525,300

    Explanation:

    The maximum business interest deduction will be 30 percent of Adjustable Tax income.

    Adjustable Tax income = Taxable Income + Business Interest + Depreciation

    Adjustable Tax income = $1,260,000 + $240,500 + $250,500

    Adjustable Tax income = $1,751,000

    Maximum business interest deduction = 30% * Adjustable Tax income

    Maximum business interest deduction = 30% * $1,751,000

    Maximum business interest deduction = $525,300
  2. 19 October, 02:48
    0
    Maximum business interest deduction that George will be eligible to claim this year will be $525,300

    Explanation:

    Maximum business interest deduction is 30% of Adjusted Taxable income (ATI)

    Adjusted Taxable income (ATI) = 1260000+240500+250500 = $1,751,000

    Maximum business interest deduction = 1751000*30% = $525300
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