Question

George operates a business that generated revenues of $67 million and allocable taxable income of $1.42 million. Included in the computation of allocable taxable income were deductible expenses of $248,500 of business interest and $258,500 of depreciation. What is the maximum business interest deduction that George will be eligible to claim this year?

Answer 1

$578,100

Step-by-step explanation:

Adjusted Taxable income (ATI) = 1,420,000 + 248,500 + 258,500

Adjusted Taxable income (ATI) = $1,927,000

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

Maximum business interest deduction = $1,927,000*30%

Maximum business interest deduction = $578,100

So, the maximum business interest deduction that George will be eligible to claim this year is $578,100.