In 2019, una corporation has $500,000 of adjusted taxable income, $22,000 of business interest income, and $120,000 of business interest expense. it has annual average gross receipts of more than $25,000,000 over the prior three taxable years. a. what is una’s interest expense deduction? b. how much interest expense can be deducted if una’s adjusted taxable income is $300,000?

they will deduct full of $120000 interest

they will deduct up to $112000

Explanation:

given data

adjusted taxable income =  $500,000

business interest income = $22,000

business interest expense = $120,000

annual average gross receipts = $25,000,000

solution

we know that Maximum Deduction is here express as

Maximum Deduction = ( adjusted taxable income × 30% ) + business interest income     1

put here value

Maximum Deduction = ( 500000 × 30% ) + 22000

Maximum Deduction = $172000

so that here they will deduct full of $120000 interest

and

for Maximum Deduction is here

Maximum Deduction = (300000 × 30%) + business interest income    2

Maximum Deduction = (300000 × 30% )+22000

Maximum Deduction = $112000

so that they will deduct up to $112000