Company n an accrual basis taxpayer owes 50000 to creditor


Company N, an accrual basis taxpayer, owes $50,000 to Creditor K. At the end of 2000, Company N's bookkeeper properly accrued $4,100 of interest payable on this debt. The bookkeeper didn't pay this liability until March 3, 2001. Both Company N and Creditor ? are calendar year taxpayers. For each of the following cases, determine the year in which Company N can deduct the $4,100 interest expense.

a. Creditor ? is a cash basis taxpayer, and Company N and Creditor ? are unrelated parties.

b. Creditor ? is an accrual basis taxpayer, and Company N and Creditor ? are related parties. ? Creditor ? is a cash basis taxpayer, and Company N and Creditor ? are related parties.

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Accounting Basics: Company n an accrual basis taxpayer owes 50000 to creditor
Reference No:- TGS01414351

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