On November 1 of year 0, Jaxon borrowed $50,000 from Bucksnort Savings and Loan for use in his business. In December, Jaxon paid interest of $4,500 relating to the 12-month period from November of year 0 through October of year 1.
a) How much interest, if any, can Jaxon deduct in year 0 if his business uses the cash method of accounting for tax purposes?
b) How much interest, if any, can Jaxon deduct in year 0 if his business uses the accrual method of accounting for tax purposes?